Are Non-Compete Provisions in Physician Employment Contracts Invalid as a Matter of Law?

No, but where a physician is involved, it may be much more difficult to enforce them. Ohio law permits non-competition covenants in employment contracts, but these covenants are disfavored under the law because they act to restrain trade. Where covenants not to compete involve a physician, they may also interfere with a paitent's right to choose his or her own doctor. The Court generally disfavors covenants not to compete involving professionals because restrictions limiting the ability of a physician to practice may affect the public’s ability to obtain medical care. In fact, some courts will not enforce a covenant that will restrict a patient’s right to choose his or her physician.

Generally, the purpose in allowing non-competition agreements is to foster commercial ethics and to protect an employer's legitimate interests by preventing unfair competition. Therefore, Ohio courts must balance the legitimate interests of the employer against, the potential harm to the community or the physician. Courts have held that a covenant restraining a physician employee from competing with his former employer are unreasonable when it imposes undue hardship on the physician and is injurious to the public, the physician's services are vital to the health, care and treatment of the public, and the demand for the physician's medical expertise is critical to the people in the community. If there is no legitimate interest of the employer to protect, then a noncompete agreement is unreasonable.

Ohio follows the reasonable alteration approach, under which trial courts have the discretion to modify an overbroad covenant to make it reasonable and enforceable. If the court does modify the provisions (e.g., to reduce the geographic or time restriction), the burden of proof remains on the Plaintiff to prove breach of the contract. In modifying covenants overbroad as written, courts applying Ohio law should go no further than required to protect a former employer’s legitimate interest.

If you have any questions on non-competition agreements, please feel free to contact me.