Pennsylvania Bill Prohibiting Enforcement of Health Care Non-Competes Referred to House Health Committee

If history repeats itself, this bill won’t likely get much traction, but on September 15, 2020, the Pennsylvania House of Representatives, Committee on Professional Licensure, recommended that House Bill 2636 be referred to the House Health Committee. If House Bill 2636, which is known as the Health Care Practitioner Noncompete Agreement Act, becomes law, covenants not to compete in health care practitioner employment agreements would be void and unenforceable to the extent that the covenant: (1) restricts the movement of a health care practitioner to a new employer; or (2) restricts a health care practitioner from practicing within a specific geographic area.

Under the proposed law, notification by health care practitioners to patients to whom the practitioner rendered professional services for which the practitioner was compensated within three years prior to the date the practitioner voluntarily discontinued his/her employment (“Prior Patients”) would be limited to: (1) any change in the practitioner’s scope of practice; (2) the practitioner’s new contact information; and (3) the practitioner’s new employer. In addition, within a reasonable period of time after written notice of the health care practitioner’s intent to separate from the employer, the proposed law requires the employer to make available to the separating health care practitioner all contact information and existing electronic medical records of the practitioner’s Prior Patients.

The proposed prohibition on covenants not to compete would not apply with respect to activities, products and services that are outside the scope of practice of the health care practitioner if: (1) the restriction is reasonable in time, geographic area and scope of the prohibited activity, product or service; and (2) the health care practitioner receives reasonable notice of the scope of the restriction. In addition, the proposed law would not: (1) limit the period of time for which a party may agree to maintain information as confidential or as a trade secret; (2) limit the geographic area within which the information must be kept confidential or as a trade secret; (3) allow a health care practitioner to contact or solicit individuals who are patients of the former employer but who are not prior patients of the health care practitioner; or (4) create a separate right to the patient list of the employer.

A similar bill proposing to make covenants not to compete in health care practitioner employment agreements void and unenforceable passed the House in the 2017-18 legislative session, but went nowhere in the Senate. We will continue to track the progress of House Bill 2636, but anticipate a similar fate.