In early May, Indiana Gov. Mike Braun signed legislation to expand restrictions on noncompete clauses in some physician contracts, The National Law Review reported June 16.
The legislation goes into effect July 1, and prohibits noncompete agreements between physicians and hospitals, parent companies of healthcare organizations, affiliated managers of a hospital and a hospital system. It does not repeal or replace any existing contracts, affecting only those signed after the effective date.
The new regulations further define a “noncompete” as any contact or contractual provision that restricts or penalizes a physician’s ability to practice medicine in any geographic area for any period of time after a physician’s employment ends.
This expanded definition includes restrictive covenants that:
- Penalize physicians financially or impose repayment obligations pursuant to practicing medicine with a new employer
- Require employer consent to practice medicine with a new employer
- Impose indirect restrictions that limit or deter a physician from practicing medicine with a new employer
The legislation also creates a new definition of “hospital” that does not include freestanding health facilities, rural emergency hospitals and behavioral and mental health institutions.
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