Are Arizona Non-Compete Agreements Against a Doctor/Physician Enforceable?
Unlike California, Arizona allows for non-compete agreements to be enforced against employees of a company after they leave employment. The basic elements for any enforceable non-compete agreement in Arizona are that they must have a legitimate business purpose, a limited time duration, a reasonable restricted area, and a narrow scope of job duties.
For more information about these items, click here. However, not all employees are treated equally when it comes to non-compete agreements. The Arizona courts have made clear distinctions between certain professions based on what they call “public policy” interests.
Doctors are Different
In particular, Arizona courts have said that there is a public policy interest against enforcing non-compete agreements against doctors because of the unique relationships that patients have with their doctors. Specifically, Arizona judges have found that they want to protect a patient’s choice as to what doctor they wish to see, even if that doctor changes medical practices. are unique because of the patient. Valley Med. Specialists v. Farber, 194 Ariz. 363, 367-69, 982 P.2d 1277, 1281-83 (1999).
Doctor Non-Compete Agreement Requirements
Still, Arizona courts do not exclude non-compete agreements with doctors entirely. The Arizona courts have said:
Because ‘the doctor-patient relationship is special and entitled to unique protection,’ a non-competition agreement to which a physician is a party ‘will be strictly construed for reasonableness’ based on ‘the totality of the circumstances.’ Farber, 194 Ariz. at 369 ¶¶ 19, 20. ‘A restriction is unreasonable and thus will not be enforced: (1) if the restraint is greater than necessary to protect the employer’s legitimate interest; or (2) if that interest is outweighed by the hardship to the employee and the likely injury to the public.’ Id. at 369 ¶ 20 (citations omitted).
Shufeldt v. NextCare, Inc., No. 1 CA-CV 15-0327, 2016 Ariz. App. at *10-11 (Ct. App. Nov. 10, 2016)
In other words, a non-compete agreement against a doctor will be reviewed by the court to determine whether 1) it is greater than necessary to protect the employer’s interest, and 2) if the interest of the employer is outweighed by the patient’s ability to choose their doctor.
Example
After reviewing the case law above, let’s look at the issues if an orthopedic surgeon’s non-compete agreement read as follows:
Doctor agrees that during the course of his/her employment and for a period of 12 months hereafter, Doctor shall not practice medicine within a 50-mile radius from any facility of the Employer at which Doctor provided services in the last year.
This would be unenforceable for several reasons:
1. First, a surgeon must be allowed to treat patients at any hospital at which his/her patients may go for surgery. Because of that, a common carve out in doctor non-compete agreements is that they can provide care at any hospital within the “restricted area.”
2. Second, this non-compete prohibits the doctor from practicing all medicine, rather than just from performing orthopedic medicine within the restricted area. Because of that, it is likely “overboard.”
3. Third, it is not clear whether a 50-mile radius and twelve months are truly necessary for the employer to protect a legitimate business interest. The facts that a court would look at to determine whether that area restriction and time restriction were reasonable would be how far away patients lived to the current employer’s practice, how long it would take for the employer to replace the orthopedic surgeon, and how often the orthopedic surgeon met with the patients.
4. Lastly, there is typically a carve-out for Good-Samaritan types of services where the doctor provides emergency care on the side of the road or under emergency situations.
Drafting and Reviewing Non-Compete Agreements
It is important to understand that the enforceability of each doctor/physician’s non-compete agreement is based upon the specific facts of the situation. Bryceland v. Northey, 160 Ariz. 213, 217 (App. 1989) (“Each case hinges on its own particular facts”.). To see if you have an enforceable non-compete agreement, you should meet with an attorney who handles doctor/physician non-compete agreements on a regular basis.
Contact Counxel Legal Firm
If you have questions about a non-compete agreement or you would like to set up a strategy session with an attorney, then Counxel Legal Firm would love to help. Contact us at (480) 744-6621 or at request@counxel.com. Don’t forget to check out the good things that others are saying about the services they received from Timothy Coons on Google.
This article is intended for informational purposes only and does not constitute legal advice for your specific situation. Use of and access to this article does not create an attorney-client relationship between you and Counxel Legal Firm. Please contact request@counxel.com or (480) 744-6621 to request specific information for your situation.
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