New TN law sets forth parameters for reasonable non-compete covenants between health care providers and employees

Public Chapter 487
NON-COMPETE COVENANTS BEWEEN HEALTH CARE PROVIDERS AND EMPLOYEES

This new law sets forth parameters for reasonable non-compete covenants between health care providers and employees upon termination or conclusion of the employment or contractual relationship. It applies to health care providers licensed by the Board of Registration in Podiatry, Board of Chiropractic Examiners, Board of Dentistry, Board of Medical Examiners, Board of Optometry and Board of Examiners in Psychology. It does not apply to physicians who specialize in the practice of emergency medicine or radiology.

The restriction must be set forth in employment agreement or other written document signed by the health care provider and the employing or contracting entity and must be for two years or less. The maximum allowable geographic restriction is the greater of a ten mile radius from the primary practice site of the health care provider while employed or contracted or the county in which the primary practice of the health care provider while employed or contracted is located or there is no geographic restriction but the health care provider is restricted from practicing his or her profession at any facility at which the employing or contracting entity provided services while the health care provider was employed or contracted with the employing or contracting entity. Any restriction under this subsection shall not be binding on a health care provider who has been employed by, or under contract with, the employing or contracting entity for at least six years.

It also allows that an agreement entered into in conjunction with the purchase or sale of a health care provider's practice, or all or substantially all of the assets of the health care provider's practice, may restrict such health care provider's right to practice his or her profession, provided that the duration of the restriction and the allowable area of the restriction are reasonable under the circumstances. There shall be a rebuttable presumption that the duration and area of restriction agreed upon by the parties in such an agreement are reasonable.

The complete text of the Public Act, including provisions for any areas of exemption; enforcement of the Act; and action to be taken for violations of the Act, is available at here.

This law becomes effective on January 1, 2008.

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Note: This law effectively overrules Murfreesboro Medical Clinic, P.A. v. Udom, 166 S.W.3d 674 (Tenn. 2005)

FDA to hear arguments over proposed new "behind-the-counter" drug class.

[Source: Health and Life Sciences Law Daily, November 14, 2007 - AHLA]

HealthDay (11/14, Reinberg) reports, "Experts at the U.S. Food and Drug Administration are meeting Wednesday to hear arguments on whether or not pharmacists might someday bypass doctors and directly provide consumers with certain drugs that now require a prescription." If such a plan is adopted, "it would create a new class of drugs that could be sold by pharmacists 'behind-the-counter (BTC),'" and might include things like "birth control pills, cholesterol drugs, and migraine medicine." Pharmacists would be required to discuss purchases of these types of drugs with patients before dispensing them.

CNN (11/14, Smith) adds, "So far in the U.S., Plan B is the only prescription drug to switch to behind-the-counter status."

GAO report finds 30,000 Medicaid providers did not pay federal taxes in 2006.

[Source: Health and Life Sciences Law Daily, November 14, 2007 - AHLA]

USA Today (11/14, Wolf) reports, "More than 30,000 Medicaid providers in seven states failed to pay more than $1 billion in federal taxes last year, but the government can't trim healthcare payments in order to collect," according to a report by the Government Accountability Office (GAO). "In its fifth report to a Senate panel investigating tax cheats that do business with the government," the GAO estimates that "about five percent of Medicaid providers in the seven states cheat on their taxes -- particularly payroll taxes collected from employees." According to USA Today, "Some of the more flagrant violators had multimillion dollar homes, along with fancy cars and boats, the report says. Others were guilty of patient abuse or other healthcare violations." However, the report did not identify the doctors or providers.

The AP (11/14) adds that the GAO report examined providers in "California, Colorado, Florida, Maryland, New York, Pennsylvania and Texas." Currently, "federal law does not prevent healthcare providers who owe back taxes from enrolling in Medicaid." And, officials at the CMS "said such a requirement could make it harder for states to provide healthcare to poor people." Meanwhile, the GAO's report stated "that if the IRS had a system to levy part of the Medicaid payments, it could have collected between $70 million and $160 million last year."