SRC-JXG H.B. 3285 76(R)   BILL ANALYSIS


Senate Research Center   H.B. 3285
By: Van de Putte (Armbrister)
Health Services
5/13/1999
Engrossed


DIGEST 

In today's medical practice environment, many physicians have grouped
together to form multispecialty clinics, leaving fewer solo practitioners.
When a physician leaves a group to enter his or her own practice or another
group practice, the ability of the departing physician to treat patients
may be hindered due to a covenant not to compete a contractual clause in
the work contract.  This clause may make it difficult for the patient to
have records transferred to the departing physician's new office and to
receive continuing care from that physician.  H.B. 3285 would establish a
"buy-out" clause in a covenant not to compete, as well as other provisions
designed to allow a departing physician to provide patients with continued
care. 

PURPOSE 

As proposed, H.B. 3285 sets forth criteria regarding the enforceability of
covenants by physicians not to compete. 

RULEMAKING AUTHORITY

This bill does not grant any additional rulemaking authority to a state
officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 15.50, Business & Commerce Code, as follows:

Sec. 15.50. CRITERIA FOR ENFORCEABILITY OF COVENANTS NOT TO COMPETE. (a)
Provides that a covenant not to compete under this section is subject to
any applicable provision of Subsection (b).  

(b) Provides that a covenant not to compete is enforceable against a person
licensed as a physician by the Texas State Board of Medical Examiners
(board) if the covenant also complies with the following requirements:  

(1) the covenant must not deny the physician access to a list of the
physician's patients whom the physician had seen or treated within one year
of termination of the contract or employment; provide access to medical
records of the physician's patients upon authorization of the patient and
any copies of medical records for a reasonable fee as established by the
board under Section 5.08(o), Article4495b, V.T.C.S.; and provides that any
access to a list of patients or to a patient's medical records after
termination of the contract or employment shall not require such list or
records to be provided in a format different than that by which such
records are maintained except by mutual consent of the parties to the
contract; and 

(2) the covenant must provide for a buy-out of the covenant by the
physician at a reasonable price or, at the option of either party, as
determined by a mutually agreed upon arbitrator or, in the case of an
inability to agree, an arbitrator of the court whose decision shall be
binding on the parties; and  

(3) the covenant must provide that the physician will not be prohibited
from providing continuing care and treatment to a specific patient or
patients during the course of an acute illness even after the contract or
employment has been terminated.  
 
SECTION 2. Makes application of this Act prospective.

SECTION 3. Effective date: September 1, 1999.

SECTION 4. Emergency clause.