Osteopathic Docs Not Included
I read the article in the August Tennessee Bar Journal regarding physician non-compete agreements (“Physician Non-compete Agreements Revisited and Revived,” by Josh McCreary). It listed osteopathic physicians among the professionals to whom the new law applies. However, the final version of the new law specifically exempts osteopathic physicians. It is a bit confusing because the applicable amendment only deletes “9” from the original bill. That reference is to Title 63, Chapter 9, which is the osteopathic physician practice act. Lawyers drafting non-competes involving osteopathic physicians need to be aware of this exemption whether they represent the physician or the medical practice. Thank you.

— Yarnell Beatty, General Counsel Tennessee Medical Association, Nashville

Legislature Did Not Fix Problem
I would like to thank Mr. McCreary and compliment him on his insightful analysis of the issues created by the Tennessee legislature’s enactment of the new health care provider non-competition covenant statute, as discussed in his article: “Physician Non-Compete Agreements Revisited and Revived,” Tenn. Bar J., Vol. 43, No. 8, pp. 17-19 (August 2007).

In my view, the legislature’s attempt to resolve the issues raised by the Tennessee Supreme Court’s 2005 decision in Murfreesboro Medical Associates, P.A. v. Udom, by enacting the new statute, was well intended, but was in reality, an exercise in futility. In determining what is to be deemed a reasonable scope of health care provider non-competition covenant in the new statute, the legislature undoubtedly borrowed from the other physician non-competition covenant statutes currently provided for in Tenn. Code Ann. Sections 63-6-204 and 68-11-205.

However, this one-size-fits-all approach is not likely to resolve the problem. That is because non-competition covenants, which are disfavored in the law to begin with, must be analyzed on the basis of their own unique facts and circumstances before they can ever really be determined to be “reasonable.” What is reasonable in one context is not necessarily reasonable in another.

For example, according to current records of the Health Resources and Services Administration of the United States Department of Health and Human Services, many areas in Tennessee are designated as Health Professional Shortage Areas and/or Medically Underserved Populations (See http://bhpr.hrsa.gov/shortage/). The new health care provider non-competition covenant statute does not consider this, and would allow employing entities to force health care providers out of these underserved communities pursuant to a non-competition covenant. Conversely, in larger, urban populations without such shortages, the scope of the non-competition covenant allowed by the new statute may not be broad enough to deter health care providers in certain specialties and subspecialties from remaining in the community and competing with their former employers.

Also, with regard to the statute’s exemption for health care providers who have been employed by the entity for at least six years, will the jobs of health care providers who are approaching this six-year benchmark be in jeopardy, such that the employing entity feels the need to terminate the employment relationship prior to the provider’s six year anniversary, so that the entity will be in a position to enforce its non-competition covenant?

It is not clear to me why the legislature did not merely treat health care provider non-competition covenants in the employer-employee situation the same as it did with regard to sale of practice non-competition covenants. That is, why shouldn’t all health care provider non-competition covenants be enforceable if they are reasonable under the circumstances, and why shouldn’t all such covenants be accompanied by a rebuttable presumption of reasonableness if the parties agreed to the covenant in writing at the outset of their relationship?

— Walter E. Schuler, Memphis