Reconciling Florida Case Law on Physician Non-Compete Agreements: You Can’t

One of the biggest open questions of law in the State of Florida is the enforce-ability of physician non-compete agreements. To most people, that statement is fairly shocking. In my experience, people – lawyers and laypeople alike – have one of two opinions about the state of the law: Let’s start with non-lawyers: Most non-lawyers think non-compete agreements are generally unenforceable. So when it comes to physician non-compete agreements, most non-lawyers say, “There’s no way some non-compete agreement can keep me from staying with my doctor.” When it comes to lawyers, it’s a mixed bag. Some lawyers view non-compete agreements as binding contracts that are automatically enforceable in every instance. Those lawyers say things like, “Of course the doctor’s non-compete agreement is enforceable. It’s a contract. He signed the contract and that’s that.” Other lawyers think physician non-compete agreements are per se unenforceable. These lawyers actually have a better grasp of the overall structure of the legal system. They understand things like policy concerns. These are the lawyers who usually say something like, “Look, even if non-compete agreements are usually enforceable, there has to be a public policy exception when it comes to doctors. You can’t interfere with the doctor-patient relationship.”For my part, I agree with the lawyers who raise the issue of public policy and the doctor-patient relationship. I agree that physician non-compete agreements should be per se unenforceable and void as against public policy. That is how the law should be. But at present, that’s not where the law in Florida stands.

So, what is the current state of law the in Florida with respect to physician non-compete agreements? In short: It’s complicated. You have a number of different appellate court decisions on physician non-compete agreements that come out in different ways. And then, you have one particular case that did not deal with the standard physician/practice non-compete agreement, but dealt with a physician/HMO agreement, and invalidated that agreement because it interfered with the doctor-patient relationship and ran counter to Florida’s public policy. Bottom line: Florida case law pertaining to physician non-compete agreements is a complete mess. There are conflicting decisions across the board. We should expect a case to reach the Florida Supreme Court in the next few years and decide this issue conclusively:

1. All of the Cases Say that Say Physician Non-Compete Agreements are Enforceable to Some Extent

Physician non-compete agreements generally are enforceable. All of the non-compete case law affirms this general principle. In almost every physician non-compete case, the court enforces the non-compete agreement to some extent. In practice, this enforcement comes in the form of an injunction. Injunctions in physician non-compete cases generally implicate two broad categories of conduct: (1) soliciting former patients and (2) practicing medicine. Let’s take solicitation first, because it’s the easier of the two: If a physician non-compete agreement contains a non-solicitation provision, the court will enforce that provision. End of story. In those situations, the physician will be enjoined from affirmatively soliciting former patients. But what if those patients initiate contact with the doctor? What if a patient finds out that his doctor has left the practice, then seeks that doctor out in his new practice and wants to continue that doctor-patient relationship? That’s where we get into the more difficult issue of restrictions on the actual practice of medicine.

When injunctions restrict a physician’s ability to practice medicine, they always do so in respect to a particular geographic area. No Florida non-compete case holds that a doctor cannot practice medicine, period. The doctor might be barred from practicing medicine in a certain town or even a certain county, but he is free to practice medicine outside of that territory.

2. Some of the Cases Suggest a Non-Compete Cannot Be Enforced to Bar the Physician from Treating Any of His Former Patients

None of the cases that enforce physician non-compete agreements have involved the court accepting an absolute prohibition against the doctor treating any of his former patients. In fact, there are at least two Florida appellate decisions that affirmed the trial court’s ruling, that a physician practicing outside of the restricted territory could treat former patients who affirmatively sought his services. Nonetheless, the issue of restricting the doctor from treating is former patients remains a grey area.

3. One Decision Suggests that Physician Non-Compete Agreements are Per Se Unenforceable

Finally, there is one case that is an absolute anomaly. The case, which remains good law, demonstrates the complete absurdity of the entire body of Florida physician non-compete case law. That case is Humana Med. Plan, Inc. v. Jacobson, 614 So. 2d 520, 522 (Fla. 3d DCA 1992). Humana involved a dispute between an HMO and a physician. The physician left his current practice and became affiliated with a rival HMO. Shortly thereafter, roughly 170 of his patients left Humana and enrolled in a competing HMO so they could continue seeing the doctor. Under the agreement between the HMO and the physician, the physician agreed to pay Humana $700 for each patient that disenrolled from Humana and followed him to the competing HMO. The Third District Court of Appeal struck the provision as void against public policy. In short, the court held that the doctor-patient relationship is a matter of fundamental importance and the public policy of the State of Florida is violated when an economic or business relationship is allowed to interfere with the doctor-patient relationship. Id.

Reading Humana, one would think that the underlying principles of the decision would apply with equal, if not greater, force in the non-compete context. Remember, non-competes are supposed to be disfavored and enforced with an eye toward public interest. Humana involved a matter of contract and a liquidated damages clause that could have had the effect of restraining competition and blocking doctor/patient relationships. But the non-compete cases involve naked restraints of trade and direct assault on the doctor-patient relationship. The logic of Humana should apply with greater force in the non-compete context.

But, apparently, Florida appellate courts don’t think so. When faced with physician non-compete cases – which clearly implicate the principles at play in Humana – they ignore the Humana decision and act as though it doesn’t exist or has been abrogated. It has not. As a result, there exists an irreconcilable conflict in the Florida case law: On one hand, physician non-compete agreements are routinely enforced to some degree. On the other hand, you have an appellate decision (that remains good law) striking down attempts to interfere with the doctor-patient relationship as offensive to the state’s fundamental public policy. This is a conflict that cannot be reconciled and requires the Supreme Court’s intervention.

Jonathan Pollard a competition lawyer based in Fort Lauderdale. He is licensed in all Florida federal and state courts and routinely represents clients in Miami, Fort Lauderdale, West Palm Beach, Fort Myers, Tampa, Orlando and Jacksonville.  His office can be reached at 954-332-2380.