New Mexico has joined the list of states that have outlawed physician non-compete agreements. Under New Mexico’s new law, non-compete agreements for healthcare practitioners are unenforceable. The law does allow for enforcement of a limited, 1-year non-solicitation provision. Under the new law, a doctor could leave one practice, start his own practice in the same location and compete for the same patients provided he did not affirmatively solicit them. This, of course, is because many states abide by the actual, dictionary definition of solicitation (in contrast to Florida, where some courts have adopted an absurd construction of the term solicitation that includes having any contact with a patient or client). The New Mexico law appears to cover a variety of healthcare providers, including doctors, dentists, nurses, chiropractors and others.
The New Mexico law stands in stark contrast to Florida law, which allows for aggressive enforcement of broad physician non-compete agreements. In Florida, courts routinely enforce physician non-compete agreements that bar doctors from practicing in a particular city, a county, multiple counties and even entire regions of the state. And, as noted above, some Florida courts define solicitation as having any contact with a patient or client— a definition that ignores the plain meaning of the term. Beyond this, physician non-compete agreements don’t just prevent doctors from competing for patients. They also prevent competition or contact with referral sources (i.e. other doctors). For those who follow these issues closely, note that the Florida appellate courts presently are split on the issue of referral sources. Certain appellate courts have held that non-compete and non-solicitation agreements can be used to prohibit competition for referral sources whereas other courts have held the opposite. Here’s a link to further reading on the referral split. At some point, Florida’s draconian non-compete regime may change. But for now, that is the law.
Any medical practitioner subject to a Florida non-compete agreement should exercise caution when considering a lateral move or launching a new practice. As discussed above, Florida is an aggressively pro-non-compete state and routinely enforces physician non-compete agreements. To make things even more complicated, different parts of the state are subject to different appellate case law. This means that the same physician non-compete agreement might be enforced differently in Daytona Beach (under the law of Florida’s Fifth District Court of Appeal) than it would be in Miami (under Florida’s Third District Court of Appeal). Bottom line: It is imperative that healthcare professionals seek a formal legal analysis of their employment agreements before making any career decisions. In some instances, there may be a work-around that will allow the physician to make a move or launch a new practice. In other instances, the exposure will be too high and the best course of action may be to play it safe.
Jonathan Pollard is a competition lawyer based in Fort Lauderdale, Florida. He routinely represents doctors and healthcare professionals throughout the state of Florida in non-compete matters. His office can be reached at 954-332-2380.