PRIOR PRINTER'S NO. 640
PRINTER'S NO. 1187
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
681
Session of
2021
INTRODUCED BY ECKER, BROOKS, BERNSTINE, ROWE, MERSKI, NEILSON,
RYAN, WHEELAND, CIRESI, SAYLOR, MOUL, GLEIM, ZIMMERMAN,
FREEMAN, FRANKEL, KEEFER, GILLEN, ORTITAY AND LEWIS DELROSSO,
FEBRUARY 26, 2021
AS REPORTED FROM COMMITTEE ON HEALTH, HOUSE OF REPRESENTATIVES,
AS AMENDED, APRIL 7, 2021
AN ACT
Prohibiting enforcement of covenants not to compete in health
care practitioner employment agreements.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Short title.
This act shall be known and may be cited as the Health Care
Practitioner Noncompete Agreement Act.
Section 2. Declaration of policy.
The General Assembly finds and declares as follows:
(1) Research studies have found that health care
practitioner shortages have reached alarming proportions in
the United States and, in particular, this Commonwealth.
(2) Pennsylvania is experiencing a health care
practitioner shortage for a litany of reasons.
(3) An increasingly aging population is creating a
greater need for health care practitioners.
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(4) School debts for health care practitioners also
contribute to provider shortages.
(5) Continuity of care for patients is a fundamental
goal for health care practitioners and public health
officials alike.
(6) A covenant not to compete in employment agreements
prohibits and prevents CAN PROHIBIT AND PREVENT health care
practitioners from rendering care to patients after the
health care practitioner leaves employment, even if the
agreements are for a limited period of time or geographic
scope.
(7) It is against public policy for health care
practitioners to be prohibited from rendering care to
patients due to a change in employment.
(7) IT IS IN THE PUBLIC INTEREST TO LIMIT THE USE OF
RESTRICTIVE COVENANTS IN HEALTH CARE.
Section 3. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Covenant not to compete." An agreement between an employer
and a health care practitioner that is designed to impede the
ability of the health care practitioner to compete with the
employer when a separating event occurs.
"Health care practitioner." As defined in section 103 of the
act of July 19, 1979 (P.L.130, No.48), known as the Health Care
Facilities Act.
"PRIMARY HEALTH CARE FACILITY OR OFFICE." THE OFFICE,
FACILITY OR LOCATION WHERE A MAJORITY OF THE REVENUE DERIVED
FROM A HEALTH CARE PRACTITIONER'S SERVICES ARE GENERATED.
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"Prior patient." An individual to which a health care
practitioner rendered professional services in the health care
practitioner's scope of practice for which compensation has been
received by the health care practitioner, regardless of the
source of the compensation, within three years of the separating
event.
"Scope of practice." The authorized scope of practice of a
health care practitioner. THE ACTIVITIES OR PROFESSIONAL
SERVICES A HEALTH CARE PRACTITIONER MAY PROVIDE TO A PATIENT
BASED ON THE LICENSE THE HEALTH CARE PRACTITIONER HOLDS.
"Separating event." A health care practitioner's
discontinuance of employment with a current employer on a
voluntary basis.
Section 4. Prohibition.
(a) Covenant not to compete.--A covenant not to compete is
deemed contrary to public policy and is void and unenforceable
to the extent the covenant not to compete restricts:
(1) Movement of a health care practitioner to a new
employer.
(2) A health care practitioner from practicing within a
geographic area.
(A) GENERAL RULE.--A COVENANT NOT TO COMPETE IS DEEMED
CONTRARY TO PUBLIC POLICY AND IS VOID AND UNENFORCEABLE TO THE
EXTENT THE COVENANT NOT TO COMPETE RESTRICTS THE RIGHT OF A
HEALTH CARE PRACTITIONER TO PRACTICE IN ANY GEOGRAPHIC AREA FOR
ANY PERIOD OF TIME AFTER A SEPARATING EVENT.
(B) EXCEPTION.--AN EMPLOYER MAY ENFORCE A COVENANT NOT TO
COMPETE IF ALL OF THE FOLLOWING APPLY:
(1) THE HEALTH CARE PRACTITIONER'S PRIMARY HEALTH CARE
FACILITY OR OFFICE IS LOCATED IN A COUNTY OF THE SIXTH,
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SEVENTH OR EIGHTH CLASS.
(2) THE GEOGRAPHIC RESTRICTION IS LESS THAN A 45-MILE
RADIUS FROM THE PRIMARY HEALTH CARE FACILITY OR OFFICE OF THE
HEALTH CARE PRACTITIONER.
(3) THE LENGTH OF THE COVENANT NOT TO COMPETE IS NO MORE
THAN TWO YEARS.
(4) THE RESTRICTION APPLIES ONLY TO THE PRIMARY HEALTH
CARE FACILITY OR OFFICE OF THE HEALTH CARE PRACTITIONER.
(C) NON-AFFILIATION.--NOTWITHSTANDING SUBSECTION (B)(1) AND
SUBJECT TO SUBSECTION (B)(2), (3) AND (4), AN EMPLOYER IN ANY
COUNTY OF THIS COMMONWEALTH MAY ENFORCE A COVENANT NOT TO
COMPETE IF THE EMPLOYER IS A PROVIDER-OWNED INDEPENDENT PRACTICE
NOT AFFILIATED WITH ANY HEALTH CARE SYSTEM, HEALTH CARE PROVIDER
OR HOSPITAL.
(b) (D) Notification of prior patient.--Notification
provided by a health care practitioner to a prior patient
concerning a separating event is limited to the following
information:
(1) Any change in scope of practice.
(2) The new contact information of the health care
practitioner.
(3) The new employer of the health care practitioner.
(E) CONSTRUCTION.--
(1) NOTHING IN THIS SECTION SHALL BE CONSTRUED TO
PROHIBIT THE ENFORCEMENT OF A PROVISION IN ANY CONTRACT OR
AGREEMENT WITH A HEALTH CARE PRACTITIONER THAT ALLOWS FOR THE
RECOVERY OF EXPENSES INCURRED BY AN EMPLOYER TO RECRUIT A
HEALTH CARE PRACTITIONER OR TO ESTABLISH THE HEALTH CARE
PRACTITIONER'S PATIENT BASE, IF ALL THE FOLLOWING APPLY:
(I) THE HEALTH CARE PRACTITIONER DID NOT DISCONTINUE
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EMPLOYMENT WITH THE EMPLOYER FOR CAUSE.
(II) THE EXPENSES ARE REASONABLY ALLOCATED TO THE
HEALTH CARE PRACTITIONER AND ARE REASONABLY AMORTIZED
OVER A PERIOD OF TIME NOT TO EXCEED FIVE YEARS FROM THE
COMMENCEMENT OF THE RELATIONSHIP.
(2) AS USED IN THIS SUBSECTION, THE TERM "FOR CAUSE"
INCLUDES ANY OF THE FOLLOWING:
(I) A HEALTH CARE PRACTITIONER'S COMPENSATION OR
FRINGE BENEFITS ARE MATERIALLY REDUCED.
(II) A HEALTH CARE PRACTITIONER'S AUTHORITY,
RESPONSIBILITY AND DUTIES ARE MATERIALLY ALTERED TO THE
DETRIMENT OF THE HEALTH CARE PRACTITIONER.
(F) DAMAGES CLAUSES.--A CONTRACT OR AGREEMENT WITH A HEALTH
CARE PRACTITIONER MAY INCLUDE A LIQUIDATED DAMAGES CLAUSE FOR
THE EXPENSES INCURRED UNDER SUBSECTION (E) IF THE AMOUNT DOES
NOT EXCEED 50% OF THE HEALTH CARE PRACTITIONER'S ANNUAL
COMPENSATION, EXCLUDING FRINGE BENEFITS, IN THE FIRST YEAR OF
THE RELATIONSHIP AND IS NOT OTHERWISE UNREASONABLY EXCESSIVE.
Section 5. Duty of employer.
Within a reasonable period of time after written notice of
the health care practitioner's intent to separate from the
employer, the employer shall make available to the separating
health care practitioner all contact information and existing
electronic medical records of the prior patients of the health
care practitioner.
WITHIN 60 DAYS AFTER A SEPARATING EVENT, AN EMPLOYER SHALL
PROVIDE NOTICE OF A HEALTH CARE PRACTITIONER'S DEPARTURE TO THE
HEALTH CARE PRACTITIONER'S PRIOR PATIENTS. THE NOTICE UNDER THIS
SECTION SHALL INCLUDE INFORMATION TO THE PRIOR PATIENTS
REGARDING HOW TO REQUEST THE TRANSFER OF THEIR MEDICAL RECORDS
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TO THE DEPARTING HEALTH CARE PRACTITIONER.
Section 6. Activities outside scope of practice.
Section 4 does not apply to a covenant not to compete with
respect to activities, products and services that are outside
the scope of practice of the restricted health care
practitioner. if:
(1) The restriction is reasonable in time, geographic
area and scope of the prohibited activity, product or
service.
(2) The health care practitioner receives reasonable
notice of the scope of the restriction.
Section 7. Construction.
Nothing in this act shall be construed to:
(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.
(4) Create a separate right to the patient list of the
employer.
SECTION 8. APPLICABILITY.
THIS ACT SHALL APPLY TO AN AGREEMENT ENTERED INTO OR AMENDED
ON OR AFTER THE EFFECTIVE DATE OF THIS SECTION AND UPON THE
RENEWAL OF A HEALTH CARE PRACTITIONER'S LICENSE, REGISTRATION OR
CERTIFICATION IN THIS COMMONWEALTH ON OR AFTER THE EFFECTIVE
DATE OF THIS SECTION.
Section 8 9. Effective date.
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This act shall take effect in 30 days.
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