Indiana Quietly Passes New Physician Noncompete Legislation

As quiet as Virginia was in passing its noncompete for low wage (read “average wage”) employees, Indiana was even more quiet in passing legislation to restrict physician noncompetes.

What it says…

Buried in a 32-page public law entitled “AN ACT to amend the Indiana Code concerning health” is the following:

SECTION 8. IC 25-22.5-5.5

Chapter 5.5. Physician Noncompete Agreements

Sec. 1. This chapter applies to physician noncompete agreements originally entered into on or after July 1, 2020.

Sec. 2. To be enforceable, a physician noncompete agreement must include all of the following provisions:

(1) A provision that requires the employer of the physician to provide the physician with a copy of any notice that:

(A) concerns the physician’s departure from the employer; and

(B) was sent to any patient seen or treated by the physician during the two (2) year period preceding the termination of the physician’s employment or the expiration of the physician’s contract. Provided, however, the patient names and contact information be redacted from the copy of the notice provided from the employer of the physician to the physician.

(2) A provision that requires the physician’s employer to, in good faith, provide the physician’s last known or current contact and location information to a patient who:

(A) requests updated contact and location information for the physician; and

(B) was seen or treated by the physician during the two (2) year period preceding the termination of the physician’s employment or the expiration of the physician’s contract.

(3) A provision that provides the physician with:

(A) access to; or

(B) copies of;

any medical record associated with a patient described in subdivision (1) or (2) upon receipt of the patient’s consent.

(4) A provision that provides the physician whose employment has terminated or whose contract has expired with the option to purchase a complete and final release from the terms of the enforceable physician noncompete agreement at a reasonable price. However, in the event the physician elects not to exercise the purchase option, then the option to purchase provision may not be used in any manner to restrict, bar, or otherwise limit the employer’s equitable remedies, including the employer’s enforcement of the physician noncompete agreement.

Sec. 3. A person or entity required to create, copy, or transfer a patient medical record for a reason specified in this chapter may charge a reasonable fee for the service as permitted under applicable state or federal law.

Sec. 4. Nothing in this chapter shall be construed to prohibit, limit, impair, or abrogate:

(1) the ability of the parties to negotiate any other term not specified under this chapter; or

(2) any other right, remedy, or relief permitted by law or in equity.

What it means…

Any noncompete with a physician that is entered into starting July 1, 2020, must include certain new language regarding: (1) communications with certain patients; (2) access to patient information; and (3) a “buyout” clause.

Essentially, the agreement must provide that (1) the physician gets to see any notices about his or her departure sent by the former employer to the physician’s patients; (2) the employer must to tell patients (if they ask) where the physician is working (assuming the former employer has the information); (3) the physician can get medical records for patients who authorize it; and (4) the physician has the right to “buy out” his or her noncompete “at a reasonable price.”

The most difficult aspect of the law is (not surprisingly) the lack of any definition around what constitutes a reasonable price or how it is to be calculated. On the flip side, the new law heads off any argument that because a reasonable price can be placed on the noncompete, there is no irreparable harm if the physician violates it.

What to do about it…

There is nothing that needs to be done for existing agreements, or any agreement entered into prior to July 1, 2020, for that matter. However, employers that will be requiring physicians to agree to noncompetes on or after July 1, 2020, should review their form agreements and ensure compliance with the new requirements.


And thanks… Thank you to our student intern Elizabeth Dreisbach (Boston University School of Law) and Erika Hahn for their extensive work following and summarizing the status of all recent noncompete and trade secret legislation, including this one. And, hat tip to Taryn E. Stone and David J. Carr of Ice Miller LLP for noting that the bill had passed.