Florida Law Limits Physician Restrictive Covenants in Rural Counties
A recently passed Florida law, Florida Statutes 542.336 seeks to prevent medical providers from using restrictive covenants to monopolize medical specialties in rural counties. The law bars the enforcement of “restrictive covenants” against physicians who practice “a medical specialty in a county wherein one entity employs or contracts with, either directly or through related or affiliated entities, all physicians who practice such specialty in that county.” Once a second provider enters the market for a particular specialty in a county, restrictive covenants remain unenforceable in that county for a period of three years.
Although the purpose of the law is relatively straightforward, the statute leaves the meaning of the terms “restrictive covenant” and “medical specialty” ambiguous. While non-competes will almost certainly fall within the definition of “restrictive covenant” it remains to be seen whether Florida courts will decline to enforce less extreme restrictions such as employee non-solicitation agreements. Likewise, the failure to define the term “medical specialty” leaves ambiguity concerning whether restrictive covenants are enforceable against practitioners of sub-specialties. For example, suppose a county had five cardiology practices but only one pediatric cardiology specialist. Would the law bar enforcement of restrictive covenants against a pediatric cardiologist attempting to enter the market?
While the courts work to resolve these ambiguities, Florida medical providers should make sure to keep this law in mind when making business decisions related to rural medical practices.