Physician Employment and Non-Competes part 4

Physician's Non-Competes in Texas: Beware! Part 4

Even more disconcerting, there is a Texas case that supports an argument that the "buy-out" option may actually be turned into a penalty that must be paid by the physician. A physician has a statutory right for an arbitrator to determine the reasonableness of the buy-out price. Or a physician may disagree with an employer on the interpretation of the scope of the non-compete's geographic or temporal restrictions, and so may seek an arbitrator's ruling on the issue, given the statute's language. However, in Sadler Clinic Ass'n, P.A. v. Hart, 403 S.W.3d 891, 898 (Tex. App—Beaumont 2013, pet. denied), the court held that if a physician elects to compete despite signing a valid noncompetition covenant with a buyout provision, the physician must pay the agreed amount or elect to have a reasonable price determined by an arbitrator, and then must pay that amount. Physicians seeking guidance through the statutorily mandated arbitration process may get an unhappy surprise!

So, if not already obvious, my bottom-line opinion is that whatever "good intentions" caused the Texas Legislature (in its infinite wisdom) to pass Section 15.50(a) of the Texas Business Code, the statute now backfires in practical application most if not all of the time, actually working to the substantial detriment of physicians themselves and their ability to take care of their patients.