In Indiana, these do hold up in court, and are more typically 25-50 mile radius. When you work for a company, the referrals that are established are not yours, but are the property of the company. Below are some of the research from the algosresearch.org website:
Non-compete and non-solicitation clauses: In order to protect the market of the employer,
these clauses are inserted into the employment contract to detract the employee from setting up
shop next door to the employer. The referral patterns, physician and insurance connections, and
practice secrets built up by the employer after sometimes years of work are all worth protecting
from the potentially serious damage which would result to the employer's practice if an employee
were permitted to maintain geographic proximity or solicit current patients to enter the new
practice of the ex-employee. Accordingly, a non-compete clause is often used that has both a
geographical and temporal limitation. When structured narrowly enough, the non-compete
clauses may be judicially enforceable whereas a too broad clause would not stand up to scrutiny
in most jurisdictions. For instance, a clause which prohibits an employee from practicing within
25 miles of the practice office for a period of one year would probably be enforceable. But a
clause stating after severing of the employment contract, a physician may not practice anywhere
in the state for a period of 5 years would most likely be ruled excessive and an unreasonable
restraint of trade. What is unclear is how an employee with many practice locations could
potentially restrain a physician from practicing in a radius of 25-50 miles from any of the
employer's practice locations, especially if the physician does not routinely see patients in all the
locations. The litigation of these issues are expensive for both parties and may be decided in
favor of one or the other largely based on local jurisdiction. There are not broad sweeping
decisions from the upper courts giving direction to lower judges, so often the cases are decided
on mitigating circumstances. For instance, if the employer breached elements of the physician
contract first (may be unrelated elements such as bonus, call, etc), deference may be given to the
physician since he in good faith had executed his part of the contract up to that point. As a
method of avoiding litigation, occasionally there may be a contract element containing a buyout
clause that would permit the physician to continue working locally for a usually rather steep price.
These are often enforceable. In such circumstances, the physician is not being prohibited from
working in the area by a non-compete if the economic damages for such competition are paid to
the employer as noted in the contract clause. At times, even without a formal clause written in
the contract, an arrangement may be reached for economic payment from the physician to the
former employer in order to void the non-compete clause. Of course, the physician should have
their attorney prepare a formal document signed by both parties for such an arrangement.
Usually employers will incorporate into the contract either non-compete or non-solicitation
clauses, but not both.
Non-solicitation clauses are generally held to be more enforceable than broad non-compete
clause limitations. These clauses specifically state the physician, after separation from the
employer, may not solicit any patients of the practice of the employer. Because this type of
restrictive covenant does not prohibit the physician from practicing medicine, or competing for
patients in the same geographical vicinity, they are viewed favorably by the courts and are
usually enforced as a straight breach of contract. Solicitation usually means attempting to
coerce patients in the current practice through direct conversation or contact (telephone calls,
postcards, fliers mailed only to the former patients and not to a diverse population, etc) for the
purpose of luring those patients away from the former practice into the new practice of the
former employee. It is generally not viewed to be solicitation to advertise in the newspaper, on
radio or TV, or on a website as long as these advertisements do not mention "former patients
welcome" or other such statements targeted at the former patients. Only two courts in the nation
(one in Illinois and one in Missouri) have found non-solicitation clauses violate the restraint of
trade laws, but otherwise the clauses have been universally enforced. To be successful in
litigating such cases, employers must not only prove a breach existed, but also that there were
damages due to the breach of contract.
