The dental attorneys at Nardone Limited in Columbus, Ohio want to ensure our clients execute the proper employment agreements, so the interests of their dental practices are protected. Specifically, we want to protect our clients from unfair competition. As part of managing a successful dental practice, most dental practice owners will likely go through the process of hiring a new associate dentist at some point during their dental practice ownership. One important aspect of the hiring process is the employment agreement and the non-compete provision within that agreement.
The terms and provisions of a written employment agreement are one of the most important aspects to consider upon entering an employment relationship for both the dental practice and the associate dentist. Specifically, non-compete agreements are common in most employment contracts, especially for dentists. Non-compete agreements are extremely important since a non-compete agreement can affect the future of both, the dental practice and the associate dentist, and can prohibit more conduct than an associate dentist may expect. It is important for the dental practice and the associate dentist to review the non-compete agreement and to fully understand all conduct that it prohibits before executing the employment agreement.
What is a reasonable non-compete agreement?
A non-compete agreement can be reasonably limited by time and geographic area. These restrictions are typically necessary to protect the dental practice against unfair competition. The reasonableness of the requirements in a non-compete agreement are decided on a case-by-case basis. To determine if a non-compete agreement is enforceable, the court will evaluate if the restraint: (1) is no greater than is required for the protection of the dental practice, (2) does not impose undue hardship on the associate dentist, and (3) is not injurious to the public. The agreement must be reasonable before it will be enforced, and the interests of the dental practice, the associate dentist, and the public must be a weighed to determine what is reasonable. Raimonde v. Van Vlerah, 42 Ohio St. 2d 21, 26 (1975).
No contact or no treatment provisions in a non-compete agreement are reasonable and enforceable
In the healthcare field, it is common for a non-compete agreement to contain a ‘no contact’ or a ‘no treatment’ provision. This provision prohibits an associate dentist from treating any patient from the prior practice, even if the patient initiates contact with the associate dentist. These no treatment provisions are consistently upheld by Ohio courts and are not considered per se unreasonable. Ohio courts recognize that a dental practice has a legitimate interest in protecting its client base from unfair competition. Thus, a no treatment restriction is enforceable if it is reasonable and no greater than required to protect the dental practice.
A non-compete agreement containing a no contact or no treatment provision typically includes the following language:
…[employee] agrees that for a period of two (2) years following the date of the termination of this Agreement, he/she will not solicit or have any contact with any of the Company’s Clients, current Patients, or Potential Clients, whether or not such contact is initiated by a Client, Patient, or Potential Client… [Employee] acknowledges that any attempt to solicit, contact, call on or take away any of the Company’s Clients or Potential Clients either for herself or for any person, entity or organization, is considered unfair competition and therefore in violation of this Agreement.
As you can see, the provision prohibits the associate dentist from having any contact with the former dental practice’s patients for two years, even if the contact is initiated by the patient. Ohio courts state that limiting the patient’s choice of dentist does not make the non-compete agreement unenforceable. Specifically, in upholding a non-compete agreement, the Eighth District of Ohio stated “…although the trial court found that ‘a patient should be able to choose his or her physician’…Ohio courts have repeatedly rejected the argument that covenants are not enforceable against physicians solely because it impairs the patient’s choice.” Owusu v. Hope Cancer Ctr. of Northwest Ohio, Inc. 2011-Ohio-4466 (3rd Dist. 2011). Even though a patient has a right to choose their dentist, impairing a patient’s choice does not make the non-compete agreement invalid. If the restriction: (i) is no greater than required for the protection of the dental practice, (ii) does not cause undue hardship on the associate dentist, and (iii) is not injurious to the public, the non-compete agreement will be upheld.
Both the dental practice and the associate dentist should look at the language of the non-compete agreement to determine what conduct is restricted before signing the employment agreement. Being knowledgeable of what conduct is prohibited before entering the agreement will allow both the dental practice and the associate dentist to negotiate the terms and protect their interests. Knowing what conduct is prohibited will also allow for compliance of the non-compete agreement upon ending the employment relationship.
Contact Nardone Limited
If you have any concerns about employment or business matters at your dental practice, specifically regarding non-compete agreements, the experienced dental attorneys at Nardone Limited will assist you and your practice to ensure you are taking the necessary steps to protect your business. Nardone Limited represents dental practices in many different areas such as: (i) employment contracts; (ii) labor and employment representation; (iii) buying and selling dental practices; and (iv) human resource representation. If you would like more information regarding your dental practice, contact Nardone Limited.