August 14, 2013

From Modern Healthcare

By Joe Carlson

California arbitrator has ruled that a public hospital could legally hire a neonatologist who was banned by a “non-compete” agreement from working at the medical center because such restrictions are contrary to public policy in California.

The arbitrator ruled that Tri-City Medical Center in Oceanside could hire a doctor formerly employed by the outside management company Pediatrix even though Pediatrix's contract forbade it because the doctor formerly worked at Tri-City through a Pediatrix contract.

The decision comes at a time when thousands of doctors a year are leaving independent practice to become employees of hospitals and large physician practices. Such institutions typically seek to protect their investments in doctors through “non-compete” agreements that bar them from going to work for competitors. But there are concerns that such agreements hamper market competition and drive up prices.

“Normally, non-compete agreements are disfavored by the courts, so you start with that assumption,” said Jack Beal, a healthcare attorney with Polsinelli in Kansas City who was not involved in the Tri-City litigation. “Are they controversial? Probably. But are they common? Yes." 

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