Colorado Places New Limitation on Physician Restrictive Covenants
Earlier this month, Colorado amended its law governing physician non-compete agreements (C.R.S. § 8-2-113(3)). Since its enactment in 1982, that statute generally has prohibited agreements restricting the rights of physicians to practice medicine, but has allowed contractual provisions requiring a physician to pay damages arising from his or her competition if the damages are reasonably related to the injury suffered by the employer or other contracting party. Under the amended statute, “a physician may disclose his or her continuing practice of medicine and new professional contact information to any patient with a rare disorder…to whom the physician was providing treatment.” The goal of the amendment is to avoid interruptions to the continued care of individuals with rare disorders. The statute looks to the National Organization for Rare Disorders, Inc. to maintain a database of diseases considered “rare disorders.”
Colorado physician practices should review and, if necessary, update any restrictive covenants in their physician agreements to ensure they are enforceable under the amended statute, bearing in mind that physicians now have the right to communicate personal contact information to patients suffering from rare disorders. Going forward, to avoid future disputes, physicians and their employers or practices may even wish to agree upon the language departing physicians can use to communicate information regarding their new practice to persons with rare disorders.
Also, any such review of physician agreements should consider the recent Colorado Supreme Court decision limiting the damages physicians’ practices can recover against physicians in breach of their non-compete agreements.