The Minnesota Attorney General’s Office began investigating Wausau, Wis.-based Aspirus Health in October after several physicians filed antitrust complaints about amended employment contracts, including changes to noncompete clauses.
In a Dec. 17 report, Medscape outlines the details of the case and connects it to the national conversation surrounding noncompete agreements.
Background
Aspirus merged with St. Luke’s in 2024. The merger formed a 19-hospital system with more than 1,300 employed physicians and advanced practice providers across Wisconsin, Michigan and Minnesota. At the time, Aspirus said it would honor all of St. Luke’s labor, union and physician contacts, according to a news release published by the attorney general’s office announcing approval of the merger.
Physicians in Duluth, Minn., claim that they were given an ultimatum to sign amended contracts or lose their jobs. They allege the new contracts changed pay, work hours and scheduling expectations, and retained a noncompete clause.
The physicians’ original noncompete agreements included restrictions that prevented them from working within 10-25 miles of any St. Luke’s location for up to two years. Physicians told Medscape that their noncompetes have a broad reach due to the sparse population across northern Minnesota and Wisconsin.
In a statement shared with Becker’s in October, the attorney general’s spokesperson said that “[a]fter receiving complaints from employees, the Minnesota Attorney General’s Office has opened an investigation into the use of noncompete agreements at Aspirus St. Luke’s.”
The health system has maintained that the amendment does not change the terms of physicians’ noncompete agreements. The physicians counter that they are protected by Minnesota’s ban on noncompete agreements, which was passed in 2023. Wisconsin, where Aspirus is based, does not limit noncompete agreements.
National conversation around noncompete clauses
Noncompete clauses in healthcare have been the subject of national debate as the industry finds itself at the intersection of workforce shortages, access challenges and steep competition.
Becker’s has reported on nine states in the last year that have placed near-total or heavily restrictive legislation on the use of noncompetes. In September, the Federal Trade Commission voted to dismiss its appeal in two legal challenges to its 2024 rule banning noncompete agreements. While the FTC’s rule will not take effect, FTC Chair Andrew Ferguson said the commission will continue to pursue enforcement actions against what it views as unlawful noncompete agreements through antitrust laws.
That same month the FTC sent warning letters to multiple large healthcare staffing firms and employers, urging them to review employment agreements for possible unlawful noncompetes or restrictive terms.
What happens next?
While the physicians claim they are protected by Minnesota’s noncompete law, the law is not retroactive, and only applies to contracts signed after June 30, 2023, according to Medscape. Should Minnesota’s attorney general determine that the contract amendment is invalid, it would limit Aspira St. Luke’s leverage over its physicians.
Medscape independently reviewed one primary care physician’s contract and said that it included several changes. One change gives the health system more control over scheduling, which physicians told the publication could include mandatory nights and weekends without additional compensation.
The amended contract also differs from the original in that it did not specify locations of practice when addressing physician duties. Physicians told Medscape that this allows management to reassign them to different clinics and hospitals, and that they are unsure if the provision only applies to St. Luke’s locations or the entire Aspirus network.
“I think they were counting on the employees not being willing to fund their own legal battle,” one emergency room physician told Medscape. “I don’t think they saw the attorney general stepping in.”
In a statement shared with Becker’s, St. Luke’s said that “[the physicians’] agreements include a reasonable competition restriction applicable to the Aspirus Luke’s Service area, which is common. They are free to practice outside of that area.”
Courts have not weighed in on the noncompete issue in Minnesota, as the ban is relatively new, an attorney told Medscape.
Aspirus St. Luke said in the statement that it recognizes that “there are differing opinions about non-compete agreements. However, these agreements remain lawful and enforceable under current Minnesota law.”
“We continue to collaborate closely with the Attorney General’s office and are committed to working together toward a mutually agreeable outcome,” the statement continues. “In protecting our legal rights, Aspirus St. Luke’s is acting in the best interest of our organization and, more importantly, in the best interest of our patients and community.”
