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Feds accuse TX based healthcare group of collusion in noncompetes

| Mar 23, 2021 | Physicians & Physicians Groups |

Noncompete agreements are a source of debate throughout the country. On the one side, those in favor of these agreements argue they can help to better ensure talent developed within one organization does not leave to join a competitor, potentially taking important information and patients with them. On the other, those against these agreements state they can make it difficult for professionals to have the freedom they need to find professional satisfaction in their practice.

Previous cases and legislation have resulted in some guidelines that help balance these interests. For example, an individual could build a successful case to get out of a noncompete agreement that covers too broad of a geographical location or lasts for an unreasonable period of time.

But what if the issue is not the location or time of the agreement? What if there are concerns of collusion?

Collusion essentially involves those in power working together to suppress competition. In a recent case, the feds stated the medical group worked with other health care companies in the area to suppress competition over the services of senior-level employees. This, according to the prosecution, was a violation of the Sherman Act. In addition to potential issues with noncompete agreements, the government also states the group used questionable non-solicitation agreements to help achieve this potentially illegal goal. If the government can gather enough evidence to support the allegations, the group could face steep fines. A violation can come with up to $100 million in fines or twice the gain if greater than the statutory maximum.

The case provides two important lessons for those in the medical community. First, physicians and other medical professionals who believe their noncompete agreements overstep can hold their employers accountable. Second, healthcare organizations are wise to tread carefully when it comes to these and non-solicitation agreements. The government is watching these contracts closely and will move forward with an investigation and potential lawsuit if the agreements are in violation of applicable regulations.

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