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New Connecticut Bill to Limit Physician Non-Compete Restrictions

Posted in Employer/Employee Matters, Hospitals and Institutions, Legislation and Public Policy, State Matters

By adopting amended Senate Bill 351 (SB351) last week, the Connecticut General Assembly proposed to reduce significantly the enforceability of non-compete restrictions for physicians.

The bill defines “covenant not to compete” broadly and includes “any provision of a partnership, employment or other contract or agreement that creates or establishes a professional relationship with a physician and restricts the right of a physician to practice medicine….” This would include independent contracts for clinical services but would not include (or prohibit) a non-compete provision in any arrangement that does not restrict a physician’s ability to practice medicine, such as ownership in an ambulatory surgery center or a medical directorship. Non-compete restrictions for physicians would be unenforceable unless (1) the provision applies for one year or less and the geographic scope is 15 miles or less from the physician’s primary service area, or (2) the employer terminates the physician’s contract “for cause.”

SB 351 allows a hospital, health system or medical foundation to have a non-compete that restricts a physician’s right to leave to practice at another hospital, health system or medical foundation, but such restriction cannot prohibit a physician from returning to independent community practice or joining any medical foundation that is not affiliated with a hospital or health system. These new limitations would apply to any agreement that is entered into, amended, extended or renewed on or after July 1, 2016, and require a physician to “separately and individually sign” each covenant not to compete. The Bill is awaiting signature by the Governor.

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