Governor Hickenlooper recently signed into law Senate Bill 18-082, which revised Colorado’s existing statute governing non-competition agreements to explicitly permit physicians treating a patient with a “rare disorder” to disclose the physician’s professional contact information to said patients after termination of an employment, partnership or corporate agreement between physicians, even if a non-competition agreement to the contrary is in place.
Changes to Colorado’s “Agreement Not to Compete” Law
Since Colorado’s non-competition law was initially passed in 1982, it has stated, in general terms, that any covenant not to compete that restricted the right of any person to receive compensation for working for any employer would be void, unless an exception applied. Specifically with regard to physicians, the law stated that any covenant not to compete provision of an employment, partnership or corporate agreement between physicians that restricts the right of a physician to practice medicine upon termination of such agreement is void. However, physicians could be required to pay damages in an amount that is reasonably related to the injury suffered by reason of termination of the agreement.
Following the passage of Senate Bill 18-082, however, after the termination of an employment, partnership or corporate agreement between physicians that restricts the right of a physician to practice medicine upon termination, a physician may disclose his or her continuing practice of medicine and new professional contact information to any patient with a “rare disorder” to whom the physician was providing consultation or treatment before the termination of the above-referenced agreement. Further, neither the physician nor the physician’s new employer (if any) is liable for damages as a result of this disclosure. The term “rare disorder” is defined in the Act “in accordance with criteria developed by the National Organization for Rare Disorders, Inc., or a successor organization.” The National Organization for Rare Disorders, Inc., or NORD, maintains a database of more than 1,200 “rare” diseases, including Alzheimer’s Disease, Psoriatic Arthritis, Candidiasis (yeast infection), Multiple Sclerosis and Tinnitus (“ringing in the ears”).
In addition to adding a carve-out for physicians treating patients with “rare disorders,” the Act also altered the wording of the provision related to damages a physician’s former employer can recover in the event of violation of a non-competition provision. Prior to Senate Bill 18-082, the law stated, “Provisions of a covenant not to compete that require the payment of damages upon termination of the agreement may include, but not be limited to, damages related to competition.” Senate Bill 18-082 removed the language “but not be limited to.” It is not clear what substantive change, if any, was intended by this alteration. It seems likely that the change was either stylistic or intended to avoid the interpretation that a contract could not limit damages to just those related to competition.
Practical Takeaways
In light of recent changes to the law, employers should review non-competition provisions (including non-solicitation provision) in physician employment agreements and other agreements covered by Colorado Revised Statute 8-2-113 to ensure continued compliance. Further, when drafting non-competition provisions and/or when taking steps following the departure of a physician from a medical practice, employers should keep in mind Colorado Medical Board’s Policy 40-8 – Guidelines for Departure from a Medical Practice, which indicates that it is the patient’s decision from whom to receive care and sets certain requirements to minimize disruption in the quality or continuity of a patient’s care. Policy 40-8 includes certain notification requirements, including that patients should be notified of “changes in the practice” and “how to reach the provider(s) or other health care practitioner(s) remaining in the practice.”
If you have questions about physician non-competition provisions in Colorado, or the impact of Policy 40-8, please contact:
- Mark Sabey at marksabey@wp.hallrender.com;
- Mary Kate Liffrig* at mliffrig@wp.hallrender.com;
- Brian Sabey at briansabey@wp.hallrender.com; or
- Your regular Hall Render attorney.
* Admitted to practice in Indiana and Michigan. Practice temporarily authorized pending admission under C.R.C.P. 205.6 in Colorado.
