New Indiana Law Will Restrict Physician Non-Competes

Joining many other states that in recent years have enacted laws regarding physician non-competition agreements, Indiana recently enacted a statute that will place restrictions on such agreements which are originally entered into on or after July 1, 2020.

Under Pub. L. No. 93-2020 (to be codified in part as Ind. Code § 25-22.5-5.5) (2020), which will take effect on July 1, 2020, for a non-compete to be enforceable against a physician licensed in Indiana, the agreement must contain the following provisions:

1. A provision that requires the employer of the physician to provide the physician with a copy of any notice that (A) concerns the physician’s departure from the employer, and (B) was sent to any patient seen or treated by the physician during the two year period preceding the end of the physician’s employment or contract.
2. A provision that requires the physician’s employer to, in good faith, provide the physician’s last known or current contact and location information to a patient who (A) requests such information and (B) was sent to any patient seen or treated by the physician during the two year period preceding the end of the physician’s employment or contract.
3. A provision that provides the physician with (A) access to or (B) copies of any medical record associated with a patient described above upon receipt of the patient’s consent.
4. A provision that provides the physician with the option to purchase a complete and final release from the terms of the non-compete at a reasonable price.
5. A provision that prohibits the providing of patient medical records to a requesting physician in a format that materially differs from the format used to create or store the medical record during the routine or ordinary course of business, unless mutually agreed otherwise.

As is clear from these requirements, preserving a patient’s right to choose a physician, including by continuing to be seen or treated by a physician departing from a particular practice, was an important factor considered by Indiana legislators.  Also, given that Indiana law rarely allows for judicial modification of restrictive covenants, this new statute will be onerous for practices/employers who do not pay close attention to drafting their non-compete agreements.