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LEGAL EASE
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bitrator or, in the case of an inability to agree, an arbitrator of the
court whose decision is binding on the parties.
Many physician CNTCs are void out of the starting gate due to
the lack of any buy out provision.
The dollar amount of the buy-out leads many medical groups into
trouble. Although what amounts to a “reasonable” price is not spec-
ified by law, the price must have some relevance to the amount of
damages that the employer would otherwise suffer as damages from
breach, which is, by its very nature, the amount of lost profits.
This puts into significant doubt the enforceability of physician
CNTCs that set the buy out in the amount of the entire annual salary
paid to him or her by the former employer. Equally suspect are buy
outs tied to future gross collections, even measured only by collec-
tions from those patients who are “poached.”
Additionally, it’s common to see employers blow the buy-out pro-
vision by getting “too cute by half:” They don’t set out “a buy-out
price,” such as $30,000; instead they set alternative buy out prices.
For example, fearing that large number of their employed physicians
may “jump ship” to a competitor, they set a second, alternative,
higher buy out price in the event that other employed physicians also
leave the group’s employ within some time period, say within 60 days
of each other.
Despite other defects, such as failing to account for how the 60-
day time period is measured (backwards or forwards in time?), how
does the fact that other physicians leave the medical group’s employ
change the damages that the employer would suffer if the single
physician wishing to exercise his or her buy out right does so?
Such provisions are highly suspect and likely destroy the entire en-
forceability of the CNTC.
Ignored Patient Protections
Last, for any physician CNTC to be enforceable, it must contain
specific patient- protective provisions.
Specifically, the CNTC must:
1. Not deny the physician access to a list of his patients whom he
had seen or treated within one year of termination of the contract
or employment.
2. Provide access to medical records of the physician's patients upon
authorization of the patient and any copies of medical records
for a reasonable fee as established by the Texas Medical Board.
3. Provide that any access to a list of patients or to patients' medical
records after termination of the contract or employment shall not
30 San Antonio Medicine • September 2017
require such list or records to be provided in a format different
than that by which such records are maintained except by mutual
consent of the parties to the contract.
4. Provide that the physician will not be prohibited from providing
continuing care and treatment to a specific patient or patients
during the course of an acute illness even after the contract or
employment has been terminated.
The Bottom Line
Over the past decades, covenants not to compete in general have
gone from out of favor to in favor. At the same time, very specific re-
quirements must be met, especially in connection with physician
CNTCs.
Medical group employers often overreach in connection with
CNTCs. Additionally, the often become over aggressive in their buy
out provisions in order to attempt to moot a physician’s statutory
right to pay his or her way out of the restrictions.
It’s important to note that in any challenge to the enforceability
of a physician CNTC, whether in the context of a suit by the em-
ployer to enforce the covenant or in the context of a suit by the physi-
cian employee to have the CNTC declared unenforceable prior to
actually engaging in competition, the employer medical group, not
the employed physician has the burden of proving that the CNTC
is enforceable.
Additionally, under some circumstances the employed physician
may be entitled to an award of attorney’s fees, even if the CNTC is
not found completely invalid but only reduced as to time, geographic
area, or scope of restriction.
There are plenty of rumors as to the enforceability of physician
CNTCs in Texas. Just like rumors of Bigfoot sightings, they might
not be true. Especially in your instance.
That’s because each the enforceability of each CNTC turns on the
specific facts. Any physician questioning whether his or her CNTC
is actually valid should seek qualified legal counsel: Your CNTC may
simply be a paper tiger, designed to bully you from thinking of jump-
ing ship, but without any actual teeth.
Mark F. Weiss is an attorney who specializes in the business and legal
issues affecting physicians and physician groups on a national basis. He
served as a clinical assistant professor of anesthesiology at USC Keck
School of Medicine and practices with The Mark F. Weiss Law Firm, a
firm with offices in Dallas, Texas and Los Angeles and Santa Barbara,
California, representing clients across the country. He can be reached by
email at markweiss@advisorylawgroup.com.