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A BILL TO BE ENTITLED
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AN ACT
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relating to the enforceability of covenants not to compete against |
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physicians. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 15.50, Business & Commerce Code, is |
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amended to read as follows: |
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Sec. 15.50. CRITERIA FOR ENFORCEABILITY OF COVENANTS NOT TO |
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COMPETE. (a) Notwithstanding Section 15.05 of this code, and |
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subject to any applicable provision of this section [Subsection |
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(b)], a covenant not to compete is enforceable if it is ancillary to |
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or part of an otherwise enforceable agreement at the time the |
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agreement is made to the extent that it contains limitations as to |
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time, geographical area, and scope of activity to be restrained |
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that are reasonable and do not impose a greater restraint than is |
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necessary to protect the goodwill or other business interest of the |
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promisee. |
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(b) Except as provided by Subsection (b-1), a [A] covenant |
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not to compete relating to the practice of medicine is enforceable |
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against a person licensed as a physician by the Texas Medical Board |
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if such covenant complies with the following requirements: |
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(1) the covenant must: |
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(A) not deny the physician access to a list of his |
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patients whom he had seen or treated within one year of termination |
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of the contract or employment; |
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(B) provide access to medical records of the |
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physician's patients upon authorization of the patient and any |
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copies of medical records for a reasonable fee as established by the |
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Texas Medical Board under Section 159.008, Occupations Code; and |
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(C) provide that any access to a list of patients |
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or to patients' medical records after termination of the contract |
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or employment shall not require such list or records to be provided |
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in a format different than that by which such records are maintained |
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except by mutual consent of the parties to the contract; |
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(2) the covenant must provide for a buy out of the |
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covenant by the physician at a reasonable price or, at the option of |
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either party, as determined by a mutually agreed upon arbitrator |
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or, in the case of an inability to agree, an arbitrator of the court |
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whose decision shall be binding on the parties; and |
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(3) the covenant must provide that the physician will |
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not be prohibited from providing continuing care and treatment to a |
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specific patient or patients during the course of an acute illness |
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even after the contract or employment has been terminated. |
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(b-1) A covenant not to compete relating to the practice of |
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medicine that restricts a person licensed as a physician by the |
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Texas Medical Board from practicing medicine in any geographic area |
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for any period of time after the termination of a contract, a |
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partnership, employment, or another professional relationship is |
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void and unenforceable. This subsection does not apply to a |
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covenant not to compete that: |
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(1) places a restriction on research conducted by the |
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physician under the terms of a contract or in furtherance of a |
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partnership, employment, or another professional relationship |
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unless the restriction impairs the continuing care and treatment of |
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a patient receiving care or treatment as a part of the research; |
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(2) restricts a physician, other than a primary care |
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physician or pediatrician, who has an adjusted gross income for |
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federal income tax purposes of at least $250,000 for the current or |
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preceding tax year, and that income is attributable to compensation |
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earned as a physician; or |
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(3) is ancillary to the sale, transfer, or other |
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disposition of any portion of a physician's ownership interest in a |
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medical practice or a medical practice management company. |
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(c) This section [Subsection (b)] does not apply to a |
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physician's business ownership interest in a licensed hospital or |
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licensed ambulatory surgical center. |
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SECTION 2. This Act applies only to an agreement entered |
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into on or after the effective date of this Act. An agreement |
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entered into before the effective date of this Act is governed by |
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the law in effect at the time the agreement was entered into, and |
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that law is continued in effect for that purpose. |
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SECTION 3. This Act takes effect September 1, 2023. |