{"id":118,"date":"2016-08-02T13:13:57","date_gmt":"2016-08-02T13:13:57","guid":{"rendered":"https:\/\/www.apslaw.com\/its-your-business\/?p=118"},"modified":"2023-04-25T15:31:56","modified_gmt":"2023-04-25T19:31:56","slug":"terminal-prognosis-for-physician-non-competes-in-rhode-island","status":"publish","type":"post","link":"https:\/\/www.apslaw.com\/its-your-business\/2016\/08\/02\/terminal-prognosis-for-physician-non-competes-in-rhode-island\/","title":{"rendered":"Terminal Prognosis For Physician Non-Competes in Rhode Island?"},"content":{"rendered":"

Non-competition provisions signed by Rhode Island physicians on or after July\u00a012, 2016 are now unenforceable pursuant to recent legislation.\u00a0 As summarized in a prior post, the Rhode Island Superior Court in the case Medicine and Long Term Care Associates, LLC v. Khurshid<\/em>, PC 2015-0458, 2016 WL 1294194 (R.I. Super. Ct. Mar. 29, 2016) recently refused to enjoin a breach of a non-compete agreement by a local physician because it was against the public interest.\u00a0 See<\/em> Medical Non-Competes in Rhode Island: No Clean Bill of Health<\/a>.\u00a0 The Rhode Island General Assembly recently codified that public interest through the enactment of a statute prohibiting the enforcement of non-competes against licensed physicians in the employment context.\u00a0 Summaries of the general law governing non-competes can also be found on It\u2019s Your Business<\/em>.\u00a0 See<\/em> Is The Classification Of Your Workers Putting Your Business At Risk?<\/a> and Distinguishing Between Types Of Non-Compete Provisions In Rhode Island<\/a>.<\/p>\n

Enacted on July\u00a012, 2016, R.I. Gen. Laws \u00a7\u00a05-37-33 declares void and unenforceable \u201c[a]ny contract or agreement that creates the terms of a partnership, employment, or any other form of professional relationship with a physician licensed to practice medicine pursuant to [chapter\u00a037 of title\u00a05 of the Rhode Island General Laws] that includes any restriction on the right to practice medicine.\u201d\u00a0 This provision not only renders traditional non-competes unenforceable vis-\u00e0-vis physicians, but it also voids any contract that seeks to prevent a physician from soliciting patients of the physician\u2019s former employer.\u00a0 Also, while the recent Khurshid<\/em> decision did not prohibit a former employer from suing for money damages for violation of a non-compete, \u00a7\u00a05-37-33 bars both equitable relief (i.e.<\/em>, a court order prohibiting the physician from working for a competitor) and money damages based on a breach of a non-compete agreement.<\/p>\n

The General Assembly issued a press release at the time the legislation was introduced stating that its primary intent was to encourage physicians to practice in Rhode Island.\u00a0 The press release also referenced the benefits of allowing patients to remain with their doctor of choice, even if that doctor elects to move his or her practice.\u00a0 See<\/em> http:\/\/www.rilin.state.ri.us\/pressrelease\/_layouts\/RIL.PressRelease.ListStructure\/Forms\/DisplayForm.aspx?List=c8baae31-3c10-431c-8dcd-9dbbe21ce3e9&ID=11460<\/a>.\u00a0 Thus, the enactment of \u00a7\u00a05-37-33 is legislative recognition of largely the same public interest that was the basis for the Khurshid <\/em>decision.<\/p>\n

The sole notable exception to this statutory prohibition relates to the sale of a physician\u2019s practice.\u00a0 A non-compete provision contained in an agreement to sell a physician\u2019s practice is enforceable, so long as the prohibition on enforcement is no more than five years.\u00a0 \u00a7\u00a05-37-33(c).\u00a0 This exception is consistent with non-compete case law, both in Rhode Island and throughout the country, that looks more favorably on enforcement of non-competes related to the sale of a business, because (1) parties usually have more equal bargaining power in that specific context than in the employment context, and (2) often a legitimate business interest exists in preventing the seller of a business from competing with that business in the period of time following that sale.\u00a0 See<\/em>, e.g.\u00b8<\/em> Chelo’s of Woonsocket v. Chelo & Mozzarellas of N. Providence<\/em>, C.A. No. PB 03-4646, 2004 R.I. Super. LEXIS 51 (R.I. Super. Ct. Mar. 8, 2004).\u00a0 It appears that non-competes related to the sale of a physician\u2019s practice will continue to be analyzed similarly to other sale of business non-competes, albeit with a five-year cap on any temporal limitation.\u00a0 It remains to be seen whether this five-year cap creates a presumption of reasonableness for all sale of business non-competes.<\/p>\n

The effect of this legislative prohibition on the business of medicine in this state are of course dramatic, but perhaps not quite as extensive as one initially might think.\u00a0 The statute takes effect \u201cupon passage,\u201d which, in other contexts, has been interpreted to mean that the legislation is only intended to have prospective effect.\u00a0 Hydro-Manufacturing, Inc. v. Kayser-Roth Corp.<\/em>, 640 A.2d 950 (R.I. 1994).\u00a0 Thus, any employment-related physician non-competes signed on or after July\u00a012, 2016 would be governed by \u00a7\u00a05-37-33.\u00a0 Using that statute to challenge physician non-competes that were signed prior to July\u00a012, 2016 arguably would seek to give the statute improper retroactive effect, and may also run afoul of state and federal constitutional law principles.\u00a0 Thus, while the prognosis for physician non-competes in Rhode Island in the employment context is not good, a faint pulse appears to remain.<\/p>\n

I would like to thank Derek T. Rocha, a summer associate at Adler Pollock & Sheehan P.C., for his research assistance in relation to this blog post.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Non-competition provisions signed by Rhode Island physicians on or after July\u00a012, 2016 are now unenforceable pursuant to recent legislation.\u00a0 As summarized in a prior post, the Rhode Island Superior Court in the case Medicine and Long Term Care Associates, LLC v. Khurshid,…<\/p>\n","protected":false},"author":7,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[2,3],"tags":[6,5],"class_list":["post-118","post","type-post","status-publish","format-standard","hentry","category-business-law","category-employment-law","tag-non-competes","tag-rhode-island-business-law"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.apslaw.com\/its-your-business\/wp-json\/wp\/v2\/posts\/118","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.apslaw.com\/its-your-business\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.apslaw.com\/its-your-business\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.apslaw.com\/its-your-business\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/www.apslaw.com\/its-your-business\/wp-json\/wp\/v2\/comments?post=118"}],"version-history":[{"count":0,"href":"https:\/\/www.apslaw.com\/its-your-business\/wp-json\/wp\/v2\/posts\/118\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.apslaw.com\/its-your-business\/wp-json\/wp\/v2\/media?parent=118"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.apslaw.com\/its-your-business\/wp-json\/wp\/v2\/categories?post=118"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.apslaw.com\/its-your-business\/wp-json\/wp\/v2\/tags?post=118"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}