Amid a pair of conflicting court rulings – one of which blocked a Federal Trade Commission (FTC) final rule banning most noncompete clauses – the Texas Senate is pondering related legislation for the upcoming session that could impact a significant number of physicians statewide.
As part of a second round of interim charges announced Sept. 10, Lt. Gov. Dan Patrick added noncompete clauses to the Senate Business and Commerce Committee’s list ahead of the 2025 session. A committee hearing set for Oct. 1 will examine the impact of the currently paused FTC policy, which was set to take effect Sept. 4, and could potentially preview new or reworked bills on the issue.
Lawmakers explored the issue in 2023, with the Texas Medical Association’s Council on Legislation (COL) working to ensure companion bills by Sen. Charles Schwertner, MD (R-Georgetown) and Rep. Greg Bonnen, MD (R-Friendswood) balanced the needs of both employer and employee physicians.
“We just want to make it more fair or better for the individual physicians and the physician practices,” immediate past COL chair Tilden Childs, MD, told Texas Medicine Today.
He adds that while physicians should be able to change their practices if they decide they need to while still practicing close to their homes, individual physician practices may need noncompetes to protect legitimate business interests.
This past May, TMA’s House of Delegates adopted a policy considering the needs of both physician employers and employed physicians. That policy calls for:
- Additional statutory limitations focused on the reasonable duration and geographic scope of noncompetes;
- Clear exceptions in certain circumstances, such as those in which a physician subject to a noncompete wishes to practice in a medically underserved area; and
- Increased transparency and fairness.
The American Medical Association estimates anywhere from 37% to 45% percent of physicians operate under a noncomplete clause.
Michelle Romero, TMA associate vice president of public affairs, notes that in addition to many hospital-affiliated physicians, some Texas physicians working for large physician groups operate under a noncompete clause.
FTC’s final rule on non-compete clauses seeks “to promote competition by banning non-competes nationwide, protecting the fundamental freedom of workers to change jobs, increasing innovation, and fostering new business formation.”
U.S. District Judge Kelly Brisbon Hodge of the Eastern District of Pennsylvania sided with the FTC in a July 23 decision in a case challenging the agency’s final rule.
But on Aug. 20, U.S. District Judge Ada Brown of the Northern District of Texas kept the final rule from going into effect with her decision on a similar case, asserting the FTC overstepped its authority in creating the rule, and setting up a potential FTC appeal to the 5th U.S. Circuit Court of Appeals.
To learn more about potential legislation for the upcoming session, visit TMA’s advocacy webpage. You can also attend TMA’s Business of Medicine Conference, which will feature a legislative update.
Phil West
Associate Editor
(512) 370-1394
phil.west[at]texmed[dot]org
Phil West is a writer and editor whose publications include the Los Angeles Times, Seattle Times, Austin American-Statesman, and San Antonio Express-News. He earned a BA in journalism from the University of Washington and an MFA from the University of Texas at Austin’s James A. Michener Center for Writers. He lives in Austin with his wife, children, and a trio of free-spirited dogs.