Non-compete clause question

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nycitygas

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Hey guys,

Say hypothetically I'm laid off because of a drop in volume or the group loses a contract - is the non-compete clause still in effect in the state of texas?

Thanks

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not a lawyer
don't live in Texas

I'm guessing if you get let go because of a drop in volume that the non-compete still is in effect.
I'm guessing if the group loses the contract, the non-compete is not in effect. I mean who'd enforce it? A group that no longer exists?

I'd ask an actual lawyer in Texas, though, if you were making a career decision based on it.
 
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It depends on the actual wording of the non compete clause:
If the contract states that you are not allowed to work within a certain distance even if the group is no longer providing the service at that location then the owner or partners can still enforce the clause if they choose to.
 
It depends on the actual wording of the non compete clause:
If the contract states that you are not allowed to work within a certain distance even if the group is no longer providing the service at that location then the owner or partners can still enforce the clause if they choose to.

In some states (most? all?) I believe wording a contract like that is unenforceable. A group that exists to provide anesthesia at a location cannot claim damages from you working in the same geographic area after that group ceases to provide the service that they don't want you to compete with. It's a "non-compete" to prevent you from competing with them. If they aren't in the game, there is nothing to compete with. The only caveat would be if you were contracted to work with someone else before the group folded. But once they are gone, you are probably fair game to work anywhere as you can't damage a group that doesn't exist.
 
In some states (most? all?) I believe wording a contract like that is unenforceable. A group that exists to provide anesthesia at a location cannot claim damages from you working in the same geographic area after that group ceases to provide the service that they don't want you to compete with. It's a "non-compete" to prevent you from competing with them. If they aren't in the game, there is nothing to compete with. The only caveat would be if you were contracted to work with someone else before the group folded. But once they are gone, you are probably fair game to work anywhere as you can't damage a group that doesn't exist.

That is exactly the scenario that non competes are very effective in. Anesthesia group X has one hospital that it provides services for. The hospital wants big give backs at the next contract renewal. The controlling votes of the group decide to say "NO". The day comes when the contract expires. The hospital goes to the individual group members and tries to get them to break ranks. The non compete the doc signed with the group prevents them from breaking ranks. Even though the anesthesia group is no longer providing services anywhere, it is still a valuable business asset during potential negotiations. If you are talking about this noncompete preventing a doc from going elsewhere within the geographic radius, I don't know how enforceable it is. Or why the group would choose to enforce-maybe vindictiveness. The hospital may have a noncompete with the individual docs preventing them from working down the road. This noncompete should be very enforceable.

There are frequently multiple non competes.
1. The one that a doc signs with the group that prevents him from competing against the group.
2. The one that each member of the group signs with the hospital in exchange for the exclusive contract preventing them from working as individuals at a competing health care facility
3. The one that the anesthesia corporation signs with the hospital preventing the corporation from providing services to the competition.

We have all three. Our lawyer tells us they are all enforceable where I am under current law.

Enforceability of any or all of them varies from state to state, even within states, exactly how it is worded, and what mood the judge is in.
 
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Ours only applies to pediatric anesthesia, so I could go down the street and do adult anesthesia for a year.
They have waived it in the past for people that mutually agreed to leave. They have also threatened to enforce it for people that quit.
 
My group lost multiple contracts and declared bankruptcy. The non compete was used to get money from the hospital to buy out non compete. I am sure that this is one of the most common uses when a contract is lost
 
My contract had 1 yr nc if termination of agreement with CAUSE by employer or non cause by employee. My interpretation is if group gets bought out and let's people go or just can't support same number of docs and lets you go its termination w/o cause and nc clause is void.
 
I was under the impression that if you get let go because of low volume, etc., and attempt to secure another job elsewhere, it's not that you are attempting to take away patients from original employer... they just don't have the business. So, why would/should that concern the previous employer? I would agree that the non-compete clause is void. But, each facility/contract is different, and so is my (and everyone's) opinion.
 
I am not a lawyer either. But my understanding is that non-compete clauses are generally difficult to enforce for anesthesiologists unless you establish yourself in a location and then try to submit a competitive bid to take over the hospital contract. If you leave a group and go practice in a location close by you're not really taking any business with you, which is what say a family practice group would be concerned about (i.e. you leave and take all your patients with you).
 
I am not a lawyer either. But my understanding is that non-compete clauses are generally difficult to enforce for anesthesiologists unless you establish yourself in a location and then try to submit a competitive bid to take over the hospital contract. If you leave a group and go practice in a location close by you're not really taking any business with you, which is what say a family practice group would be concerned about (i.e. you leave and take all your patients with you).

One more time. This varies from state to state, even within states.

An argument against a doc leaving the practice and going to work for the group down the street that provides service for another hospital is that an anesthesia group has no wish to bring somebody to an area, invest in them, have them gain business knowledge of the practice, establish a reputation, and then go work for a competing group or a group that may one day compete against it. Theoretically, losing a doc will impact the quality of the group. the quality of an anesthesia department may affect surgical volume, thus impacting the group.

It is absolutely enforceable in my geographic area according to our counsel.
 
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An argument against a doc leaving the practice and going to work for the group down the street that provides service for another hospital is that an anesthesia group has no wish to bring somebody to an area, invest in them, have them gain business knowledge of the practice, establish a reputation, and then go work for a competing group or a group that may one day compete against it.

I see your point, but anesthesiologists don't bring business to a hospital. This argument may prove enforceable in court (and that's the key) if a surgeon at one hospital requests the same anesthesiologist for every case and threatens to leave and go to the other hospital if that anesthesiologist leaves. There are no liquidated damages otherwise. Unless the contract spells this out (i.e. "you leave and go down the street you owe us $_____") it is extremely difficult to win in court. Remember we bill for services. That's our only value. There is no other inherent value in us.

Taking someone to court and winning are two different concepts. My impression (based on recent experience) is that anesthesiology groups are loathe to engage in litigation. Again I am not a lawyer. But I have been talking to several in the past month.
 
I see your point, but anesthesiologists don't bring business to a hospital. This argument may prove enforceable in court (and that's the key) if a surgeon at one hospital requests the same anesthesiologist for every case and threatens to leave and go to the other hospital if that anesthesiologist leaves. There are no liquidated damages otherwise. Unless the contract spells this out (i.e. "you leave and go down the street you owe us $_____") it is extremely difficult to win in court.

Taking someone to court and winning are two different concepts. My impression (based on recent experience) is that anesthesiology groups are loathe to engage in litigation. Again I am not a lawyer. But I have been talking to several in the past month.

An anesthesia group can easily bury an individual doc or CRNA in legal costs. If they take on one doc it will demonstrate a willingness to fight. It may prevent others from jumping ship. We look at our legal fees as the cost of doing business. We are not at all loth to sue. Our legal fees are paid with pre tax dollars. Not so an individual that we might sue. Gets very expensive very fast for an individual.

Pugnacity is an element of victory.
-Winston Churchill.
 
An anesthesia group can easily bury an individual doc or CRNA in legal costs. If they take on one doc it will demonstrate a willingness to fight. It may prevent others from jumping ship. We look at our legal fees as the cost of doing business. We are not at all loth to sue. Our legal fees are paid with pre tax dollars. Not so an individual that we might sue. Gets very expensive very fast for an individual.

Pugnacity is an element of victory.
-Winston Churchill.

This is why a lot of judgments in lost plaintiff's cases carry a contingency to recoup legal costs of the defendent from the suing party if they lose. The court system does not allow bullying by a bigger entity with deeper pockets, especially if the case was ultimately proven meritless.
 
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Unless the contract spells this out (i.e. "you leave and go down the street you owe us $_____") it is extremely difficult to win in court.

That's exactly what our non-compete clauses state. It spells out which counties you may not work as an anesthesiologist in for a period of 12 months following employment with us. It's crystal clear. But in our state if our group went under and didn't exist anymore or if we lost our contract and were "out on the street" so to say, the non-compete section of the contracts would no longer be applicable. You can't compete with the business of a group that is no longer in business.
 
That's exactly what our non-compete clauses state. It spells out which counties you may not work as an anesthesiologist in for a period of 12 months following employment with us. It's crystal clear. But in our state if our group went under and didn't exist anymore or if we lost our contract and were "out on the street" so to say, the non-compete section of the contracts would no longer be applicable. You can't compete with the business of a group that is no longer in business.


Say XYZ anesthesia group is interested in selling its practice to the hospital. It has noncompetes with its employees. Hospital buys XYZs stock and corporate assets including employment contracts that include noncompetes. XYZ is no longer in business, but ownership of its noncompetes has been transferred. They are just as enforceable in my state. I believe but am not certain that they can be transferred without selling the stock.
 
Say XYZ anesthesia group is interested in selling its practice to the hospital. It has noncompetes with its employees. Hospital buys XYZs stock and corporate assets including employment contracts that include noncompetes. XYZ is no longer in business, but ownership of its noncompetes has been transferred. They are just as enforceable in my state. I believe but am not certain that they can be transferred without selling the stock.

A group that sells itself to a corporate overload or hospital is a different situation than a group that loses a contract and it creates a much murkier legal environment for a non-compete.
 
That's exactly what our non-compete clauses state.

You have a contract that spells out exactly what they will owe if they leave and set-up shop elsewhere? A dollar amount? And people sign that contract?
 
Enforceability of any or all of them varies from state to state, even within states, exactly how it is worded, and what mood the judge is in.

I just re-read this thread again, Dr. Doze. And that's what must have been happening to me. I was dozing. You were exactly right as you described it from your original reply.

What's paramount, though, is the question "are there any damages?" In the scenario you state, yes, there probably would be damages as the people after this theoretical group A dissolve immediately reform a sub-group B and win the contract at the hospital that the prior group A had just lost. This is the "get rid of the dead weight" provision that groups put in their contracts that prevents the big dog partners who take 14+ weeks of vacation/yr and collect $500k+/yr working 30 hours a week from getting their meal trough yanked away from them when the junior partners and associates revolt.

So the bottom line and what the judge will decide is whether or not there are any damages. In the case of the original poster's question there won't be any damages to that practice. They laid the guy off. They can't them impede his ability to find meaningful work elsewhere. In fact if he has a good contract with a buy out clause or contingency for being laid off, then ironically he could probably sue. I think the courts routinely uphold judgments for the person who was laid off as the non-competes was invalid.
 
You have a contract that spells out exactly what they will owe if they leave and set-up shop elsewhere? A dollar amount? And people sign that contract?

Yes. It's practically industry standard stuff in private practice groups. Why wouldn't they sign such a clause? And it doesn't penalize them one bit if they leave our little local area. They are free to work in the other 99.999% of the country without penalty. It's the immediate geographic vicinity of which we are the only level 1 trauma center and do 98% of the cases. Basically prevents them from starting/joining a group competing for our contract and that's about it.
 
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