Category Archives: Restrictive Covenants

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CMS Approves Physician Recruitment Contracts with Restrictive Covenants

In CMS Advisory Opinion AO-2011-01, CMS has issued a favorable advisory opinion allowing the physician recruitment arrangement with a hospital and a physician practice which imposes a restrictive covenant upon the recruited physician. Restrictive covenants and recruitment arrangements had initially been prohibited by the Stark Rules. However, bowing to industry comment, CMS amended the physician recruitment … Continue Reading

Maine Supreme Court Enforces Restrictive Covenant, But Allows Liquidated Damages

Several physicians employed by Court Street Family Practice, a division of the Sisters of Charity Health Systems Inc. (Health System) resigned to join a competing practice owned by a competing health system. The employment contracts included a “Limitation of Practice” clause which “forbade them from practicing medicine with Central Maine Health Care Corporation, its affiliates or … Continue Reading

Basic Contract Issues for New Physician Contracts

  INTRODUCTION When physicians have finally completed the medical education journey, many are confronted with a “physician employment contract,” usually from a hospital or medical practice, which could define the essential terms of their professional relationship for many years to come. If the parties live happily ever after, neither may ever read the contract again. However, if … Continue Reading

Physician Restrictive Covenants

There have been many articles written about the negotiation and enforceability of physician restrictive covenants, but there are just a few fundamental concepts crucial to understanding and successfully navigating these issues. 1.         The Myth of Unenforceability. Many physicians either completely ignore or dismiss the significance of restrictive covenants because of the mistaken belief that restrictive covenants … Continue Reading

UPMC and WPAHS Battle Over Physician Restrictive Covenants

A recent Allegheny County Court Case clearly establishes that the enforceability of restrictive covenants is not an urban myth; they are enforceable and vigorously litigated.  In Allegheny Specialty Practice Network and the West Penn Allegheny Health System v. Joseph J. Colella, M.D., ASPN and WPAHS obtained a preliminary injunction prohibiting Dr. Colella from practicing within … Continue Reading

Physician Contract Issues

PHYSICIAN CONTRACTS & ISSUES INTRODUCTION The structure, purpose and terms of every physician contract are different. The content and style vary with the institutional or private practice nature of the employer and the needs and leverage of the physician.  Following is a list identifying major issues or components. I.          COMPENSATION 1.         Base Compensation. A.         Fair market value … Continue Reading

Physican Cases: Antitrust, Restrictive Covenant & Credentialing

RESTRICTIVE COVENANT UNENFORCEABLE BY SURVIVING SPOUSE  The Virginia Supreme Court ruled that a medical practice corporation, ownership of which had transferred from the deceased sole physician shareholder to his spouse and which was converted to a business corporation by state law, could not enforce a restrictive covenant because it could not practice medicine and had … Continue Reading

FLORIDA STATE COURT INVALIDATES RESTRICTIVE COVENANT

The District Court of Appeal of the State of Florida affirmed a lower state court holding that certain aspects of a restricted covenant were not enforceable. In Florida Hematology and Oncology v. Rambabu Tummala, M.D., the Practice had terminated Dr. Tummala allegedly after he began questioning certain billing practices. Although Dr. Tummala was subject to a restrictive … Continue Reading

Tennessee Supreme Court Bans Restrictive Covenants

In MurfreesboroMedical Clinic vs. Udom, the Tennessee Supreme Court ruled that restrictive covenants are not enforceable against physicians, unless specifically prescribed by law. In handing down this decision, the Court overturned an appellate court decision enforcing the restrictive covenant. Although restrictive covenants are otherwise enforceable in Tennessee, the Court found that interfering with patient freedom … Continue Reading

Restrictive Covenants – Pennsylvania Superior Court Sets Limit to Actual Market Area

In WellSpan Health v. Bayliss, the WellSpan Health System, the primary components of which are York Hospital and Gettysburg Hospital, attempted to enforce a restrictive covenant against a physician in all counties listed in the non-compete section of an employment contract, despite the fact that WellSpan had no physical presence in three of the counties. … Continue Reading
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