At the close of the 2023 session, the Connecticut legislature passed Senate Bill 9, "An Act Concerning Health and Wellness for Connecticut Residents." Buried in this legislation are amendments to the state's physician non-compete statute, which impose additional restrictions on physician non-competes and extend similar protections to advanced practice registered nurses (APRNs) and physician assistants (PAs).
Existing Law
Conn. Gen Stat. § 20-14p currently provides that a physician non-compete agreement is valid and enforceable only if it is:
- necessary to protect a legitimate business interest,
- reasonably limited in time, geographic scope and practice restrictions, and
- otherwise, consistent with the law and public policy.
The statute also prohibits any agreement that restricts a physician for more than one year or in a geographic area more than 15 miles from the primary site where the physician practices. Further, current law provides an agreement is not enforceable if the employment relationship is terminated by the employer without cause, or the agreement is not made in anticipation of, or as part of, a partnership or ownership agreement, and such agreement expires or is not renewed, unless prior to the expiration, the employer makes a bona fide offer to renew the agreement on the same or similar terms and conditions.
What's Changed?
In addition to existing requirements, as amended, the physician non-compete statute provides that non-compete agreements entered, amended, extended or renewed after October 1, 2023, will not be enforceable if:
- the physician does not agree to any proposed material change to the compensation terms of the agreement prior to or at the time of the extension or renewal of such agreement; and
- the agreement expires and is not renewed by the employer, or the employment or contractual relationship is terminated by the employer, without cause.
Importantly, the amendment re-defines the phrase "primary site of practice" from "the office, facility or location where a majority of the revenue derived from such physician's services is generated" to "any single office, facility or location where such physician practices" as mutually agreed to by the parties and defined in the agreement.
These new requirements will not apply to group practices of less than 35 physicians where the majority ownership is comprised of physicians.
New Protections for APRNs and PAs
The amendment will extend the same statutory protections afforded to physicians to any covenant not to compete with APRNs and PAs entered in, amended, extended or renewed after October 1, 2023. The exclusion for practice groups of less than 35 will not apply to APRNs or PAs.
Takeaways for Connecticut Healthcare Employers
These amendments to the physician non-compete statute are another step toward restricting the availability and effectiveness of covenants not to compete in Connecticut's healthcare industry, and mirror recent efforts across the country to eliminate or restrict non-compete agreements with certain healthcare workers. It is important for healthcare employers that utilize restrictive covenants to review and update their non-compete agreements to ensure their restrictive covenants are compliant with these new restrictions.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
