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Urologist Sues Health System Over Noncompete Clause

by News7

A Pennsylvania urologist is suing his former employer for the alleged illegal enforcement of a noncompete agreement that limits his ability to practice locally for the next 2 years. 

The lawsuit brings renewed attention to the ongoing public discourse around restrictive covenants for physicians as more state and federal legislators signal plans to limit or ban the practice. 

According to a civil suit filed on January 30 in the Court of Common Pleas, Scranton, Pennsylvania, Eric Rottenberg, MD, signed a 3-year employment agreement with Commonwealth Health Physician Network (CPN) in November 2022. He worked for the health system from May to November 2023, seeing patients at several of its locations, including Wilkes-Barre General Hospital and other facilities throughout northeast and central Pennsylvania. 

Although Rottenberg previously practiced in Albany, New York, court records state he did not bring a significant referral or patient base to the new role, receive any specialized training, or have knowledge of CPN’s trade secrets during his tenure. 

Instead, he was a “9-to-5 practitioner,” or a physician-employee like a “locum tenens whose replacement would not cost the employer more than his traditional compensation,” the complaint said. Rottenberg only treated patients assigned to him by CPN and its parent company, Commonwealth Health Systems, and did not take a patient base with him upon his departure from CPN. 

Commonwealth Health spokesperson Annmarie Poslock declined to comment on pending litigation. 

After becoming frustrated by “restrictions on his ability to practice medicine” at CPN, Rottenberg submitted the required 90-day written notice to terminate the employment agreement. He subsequently received a letter from Simon Ratliff, CPN’s chief executive officer, confirming that his last day of employment would be February 11, 2024. Ratliff also reiterated that the noncompete clause would be enforced, essentially banning Rottenberg from practicing within a 20-mile radius of his previous CPN locations for the next 2 years, court documents said. 

Rottenberg was recruited by Lehigh Valley Physician Group (LVPG), part of Lehigh Valley Health Network, in December 2023 for a urology position at its Dickson City and Scranton locations — some of which are within 20 miles of CPN facilities, the complaint said. 

Employers often include noncompete terms in physician contracts because they want to keep the departing physician’s patients from following them to a competitor. However, about a dozen states and the District of Columbia have passed legislation that allows physicians and other clinicians to more easily exit contracts and change jobs. 

For example, an Indiana law took effect on July 1 that prohibits employers from entering a noncompete agreement with primary care physicians. Minnesota legislators also banned new noncompete agreements for all employees effective July 1. 

“There’s actually been a long-standing push for bans on physician noncompetes going back to some of the first states to pass them, like Colorado, Delaware, and Massachusetts, in the late 1970s and early 1980s,” said Evan Starr, PhD, associate professor of management and organization at the Robert H. Smith School of Business at the University of Maryland. 

Although New York Governor Kathy Hochul recently vetoed a bill that would have outlawed restrictive covenants, more states may consider passing laws that limit or ban noncompetes amid increasing patient equity and care access concerns. Starr told Medscape Medical News that one reason to eliminate restrictive covenants is because they can cause “third-party harm” to patients. “The patient doesn’t get the choice to sign a noncompete, but they’re going to be impacted by that agreement if the physician has to leave the area,” he said. 

Interestingly, one profession — lawyers — is the only occupation in the US for which noncompete agreements are banned, says Starr. “Basically, the American Medical Association (AMA) and other physician governing bodies haven’t made the same policies to exempt themselves that the lawyers have.”

That may be changing. In June, the AMA’s House of Delegates adopted policies to support the prohibition of noncompete contracts for employed physicians. The change came several months after the Federal Trade Commission (FTC) proposed a new rule that could more broadly ban companies from enforcing noncompete clauses. 

Despite Rottenberg’s attorney, Ryan Campbell, Esq, claiming that the noncompete is unenforceable without a protectable business interest, CPN would not release him from the agreement and opted to move forward with litigation, court records said. The suit cites several other cases where Pennsylvania judges have released physicians from similar restrictive covenants. 

Campbell told Medscape Medical News in a written statement that he and his client are “working diligently with CPN and its counsel to resolve the matter amicably and without further litigation.” 

As employers await the FTC’s final rule, Starr says they could take steps to eliminate noncompete agreements altogether in favor of other stipulations. Contract terms prohibiting physicians from soliciting former patients could protect business interests and still allow patients to seek their preferred physician on their own accord. 

Steph Weber is a Midwest-based freelance journalist specializing in healthcare and law.

Source : Medscape

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