Our Washington readers may be interested in a non-compete case out of South Dakota which, as headlines point out, tests the limits on how far hospitals can be restricted in their ability to include non-compete agreements in physician contracts.
The case involves a Sanford Health, a hospital in Sioux Falls, South Dakota, who was sued by a former physician employee for wrongful termination, wage discrimination, harassment and retaliation. The physician in the case is a former Sanford Health gastroenterologist. In her complaint, she says that she was fired because she questioned a fellow physician's quality of care. She also claims she was paid less than her male colleagues.
As part of the decision in that case, Judge Doug Hoffman ruled that a non-compete agreement Sanford placed in its standard physician contracts violates state law since it may interfere with the doctor-patient relationship. Under South Dakota law, non-compete agreements may restrict physicians from working within 20 miles of their previous place of employment for up to two years after they leave.
According to Judge Hoffman, non-compete agreements have the potential to create an undue burden for some patients who wish to keep their doctor following a termination and have to drive lengthy distances to see them.
Sanford Health will be seeking to appeal that decision. According to sources, Sanford is likely to attempt a bypass of the circuit court and appeal the decision directly to the State Supreme Court, as the issue is one of public interest. But that can only happen once a final order on the non-compete agreement is issued.
States vary in their approach to non-compete agreements. In some states, there is a strong leaning against such agreements, whereas other states take seek to ensure that the agreement is reasonable.
Source: Argus Leader, "Case tests limits on where doctors work," John Hutt, Sep 5, 2011.