Firm News & Legal Alerts

Wednesday, April 1, 2015


You are just starting out in practice. You have successfully completed your residency and perhaps, your fellowship. You are finally ready to make a living and start paying off your student loans. Congratulations! Or, you have just moved to New York from another state, and you are ready to get a new start in the Empire State.

Either through a recruiter, a head-hunter, the internet, or personal connections, you are offered an employment contract with a group of physicians, or with a hospital. The money is right, the hours will work and you are ready to sign the employment contract. You are probably not reading the “usual lawyer stuff” in the contract beyond the pay and the hours involved. Perhaps you took a look at the vacation policy and benefit package. How many physicians actually study that paragraph that covers the restrictive covenant? Very few!

The “non-compete clause” generally defines the area and the time limitations during which you cannot practice either in you specialty or as a physician, in any capacity. When the honeymoon is over in your new job, the terms of this buried clause, can well become life-defining. If you are practicing in Nassau County, can you be banned from practicing anywhere near New York City? For how long? Same goes for Upstate New York. Just how far and for how long can your employer restrict your practice of medicine and have that restriction enforced?

There is a built in tension between your current employer and you, with the non-compete clause. Your employer has a right to protect its business that it has built up through it own sweat, work and dollars. You, on the other hand, have a right to make a living. A third party gets in on the act; the public has a right to choose and not be deprived of decent healthcare. 

So we have a balancing act at play. Like many legal questions, the answer to how large an area and how long a time can I be restricted in my practice depends. It depends on the nature of your current job that has the restrictive covenant, the nature of your current employer, the geographic location of your current employer, and the needs of the local community where you desire to work.  

Can a medical group restrict you from practicing anywhere in New York State because they have branches all over the state? Probably not. The more densely populated the area, the area that can be restricted decreases. There is no hard and fast rule at play. The exact restrictions that are enforceable are up to the individual court. An internal medicine practice in Manhattan might have a restriction of mere blocks enforceable. An ophthalmic rural surgical practice upstate, might have an enforceable restriction of several neighboring counties.   

What if you become an employee of a hospital that owns hospitals over a wide geographical area. Can you be restricted from practicing within say 10 miles of each of those hospitals? Here is where the “it depends” comes in to play. Do you regularly see patients at those other hospitals? If no, than that provision, as is, is probably not enforceable. 

Here is another scenario. What if you are an interventional radiologist and you seek another job within the restricted area and time, as a general radiologist? It will depend upon how the restrictive covenant was written. However, courts are loath to prevent a physician from practicing is (s)he will not be in direct competition with his/or former employer. So for example, if you were employed as an internist by a local group, and you pass your boards and wish to practice as a nephrologist, you would make the argument that you are not in direct competition with your prior employer. By changing your practice specialty, you have obviated the need for the restrictive covenant as to the employer; you cannot do them any harm in the capacity that they employed you in. 

Keep in mind, we are not talking about hard and fast rules; we are talking about a balancing act that the courts have to figure out. The words in the contract that you sign, even those “throw-away” clauses, that seem to be in every contract, have real meaning that can lead to real consequences in your professional life. The correct way to handle this is to employ an experienced health care attorney to help you negotiate terms you can live with BEFORE you sign on the dotted line. You should not depend on the court to void a contract AFTERWARDS. You should be depending on yourself not to get into an agreement that is odious. If the contract states that you cannot practice medicine in any capacity in Westchester County for 5 years, and that seems too restrictive, do not sign it! While a job is new, we are on our honeymoons and all seems right with the world. Down the line, when you have to deal with management, administrators, your colleagues and other considerations, you might be looking for a way out. At that time, those “boilerplate” legal terms will, all of a sudden, take on supreme importance. Deal with them before you make your deal and you will not have to deal with them during your exit strategy. An ounce of prevention IS worth a pound of cure.



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