On Nov. 4, the Society of Cardiovascular Angiography and Interventions submitted comments to the Federal Trade Commission in response to the agency’s request for information on how noncompete clauses in employment contracts impact business.
In the comments, SCAI said that “these provisions are contained in what amounts, in many cases, to contracts of adhesion because a physician’s only choice is to accept the terms of the contract without revision or else forgo employment.”
The society said that the durational and geographic stipulations of these contracts are burdensome on interventional cardiologists, who must either remain in their current position or move far away from the area in order to find a new position. This has become particularly problematic as healthcare entities grow in size and geographic reach.
“Given that physicians are licensed on a state-by-state basis, and given the rapid conglomeration of healthcare systems, the noncompete clauses that cover all of a health system’s facilities can effectively restrict physicians from finding gainful employment in the same state or region as their license,” the comments read.
SCAI concludes that these restrictive clauses are ultimately a negative force on interstate commerce and should be addressed at the federal level.
The comments also go on to say that federal regulation of noncompete clauses is “long overdue.” Only four presidential administrations have examined healthcare competition, according to SCAI. It cites a report issued by the Treasury Department in March 2016 entitled “Non-compete Contracts: Economic Effects and Policy Implications” that found “pervasive misuse” of noncompete agreements. SCAI also notes that in February, Congress introduced a bill titled Workforce Mobility Act, which seeks to limit the use and enforcement of post-employment noncompete agreements, a move that SCAI supports.
According to the FTC’s own research, 45% of all physicians are bound under some type of noncompete clause, and that about one in five of all American workers are bound by a noncompete clause that “restricts them from pursuing better opportunities.”
In the case of one court case, Iredell Digestive Disease Clinic v. Petrozza, it was discovered that the enforcement of a noncompete clause would have left only one remaining gastroenterologist in an entire community. This would have left patients not only without continuous care, but would have forced them into a monopoly under the one remaining gastroenterologist in the area.
The court decided that public interest outweighed the interests of the contract and its enforcement, setting a potential precedent for further noncompete restriction at the federal level. SCAI adds that while some commenters have argued that the FTC must make an exception for noncompete contrast with physicians, it believes that any exceptions should be reasonable, limited, but not applied only to physicians and nurses.
“For example, ‘small employers’ are often provided special considerations and defined to include businesses with variable numbers of full-time employees,” the society writes.
SCAI concludes that, especially within the context of the highly concentrated modern healthcare environment, noncompete clauses have a negative impact on the economy, workers and patient access to healthcare services.
