Three Mistakes Physicians Make When Litigating a Non-Compete Agreement

A non-compete agreement—sometimes referred to as “covenant not to compete”— is a contract agreement between the employer and employee or the business and the partner. The agreement is designed to restrict one party from working in the same profession and area for a certain amount of time, thus becoming a “non-competitor.” In the medical field, there are many trade secrets and other confidential information that has to remain unrevealed to protect the profitability of a practice.

When a breach of agreement occurs, litigation will ensue. To make sure that you win these litigations you need to avoid these three common mistakes:

1  Not Knowing Your Rights

  • Whether or not the agreement is going to be enforced depends on the contract terms. The court will base their decision on the reasonableness of the contract agreement. Although the specific laws on this matter might vary from state to state, the idea remains the same in all states.
  • Reasonable restrictions are more than likely to be upheld by the court, and a violation of these contracts are likely going to result in the breacher being penalized. For example, it is entirely within the practice’s rights to prohibit the employee from distributing confidential information such as patient records even after the termination of the employment contract.

As an employer, it is better to have a physician contract attorney draft the covenant for you to protect your business and to hold the contract violator accountable. On the other hand, the physician should also review the agreement with their attorney to ensure that the contract is fair and reasonable.

Having an unlicensed attorney draft and review your contract is a surefire way for you to be taken advantage of without a way to legally fight back.

What should I do?

  • Work with an attorney before signing the contract. If it comes to litigation, make sure you have a professional litigator on your side.

2  Not Appreciating the Time Frames Involved

  • The first step of the litigation process is to seek injunctive relief from a court before the first hearing. The whole point of this process is to obtain a restriction order from the court according to the covenant. It has to be done according to the time frame and court process. Most physicians are more familiar with the time frame of litigation for malpractice, which is significantly longer. Not abiding by the time frame of the issue at hand and failing to appear in court can leave you liable for a number of things – harsh penalties, damage costs, hefty fines, or even legal charges.

What should I do?

Be vigilant of the time frame and be sure to comply by the court’s regulations and time frame.

3 Not Knowing the Enforceability Regulations

  • The enforceability of the non-compete agreement depends on three factors: the time frame, the geographical location, and the type of practice. The reasonableness – subsequently the enforceability – of the contract will depend on these three factors. If the non-compete contract term is inconclusive, vague, or simply unreasonable, the likelihood of the contract being upheld will go down drastically.

For example, if the contract states: “The physician is unable to work in the medical field for two years after the termination of the contract,” the contract is unreasonable, and it can’t be legally enforced.

What should I do?

Consult your contract terms with an attorney prior to the litigation to review its enforceability.

Romanowsky Law specializes in Physician Contracts in the New Jersey & New York area – get in touch today to see how we can help.