Public Policy in Physician Non‐Competition Agreements

Non‐competition agreements take many forms and arise in virtually every industry, but many will encounter these agreements in employment contracts. Generally, in Nebraska, should the employer draft the non‐competition agreement properly, a court is likely to enforce it. For a physician, however, a non‐competition agreement with a practice group or similar entity can raise public policy concerns.

The purpose of a non‐competition agreement in an employment context is to protect trade secrets and customers. In the physician context, the effect of a non‐compete agreement is that a patient cannot see the physician of their choice. In most industries, a similar public policy issue will not arise, but for healthcare providers, this creates a unique problem.

For employers of physicians in Nebraska, the state has not addressed the public policy concern arising with physicians. Other states, for example, have enacted laws that address the policy concern in the physician context and how a non‐compete must be drafted, including specific provisions protecting the patients. In Nebraska, the limited law on the issue upholds the non‐competition agreement against physicians, if the agreement is reasonable. However, as with any law, it is subject to change and potential evolution to keep up with the modern practice of medicine. For a physician or a practice group, prior to drafting or signing a non‐competition agreement, it may be wise to discuss the implications with an attorney.

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