1-1 AN ACT
1-2 relating to covenants not to compete by physicians.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Section 15.50, Business & Commerce Code, is
1-5 amended to read as follows:
1-6 Sec. 15.50. Criteria for Enforceability of Covenants not to
1-7 Compete. (a) Notwithstanding Section 15.05 of this code, and
1-8 subject to any applicable provision of Subsection (b), a covenant
1-9 not to compete is enforceable if it is ancillary to or part of an
1-10 otherwise enforceable agreement at the time the agreement is made
1-11 to the extent that it contains limitations as to time, geographical
1-12 area, and scope of activity to be restrained that are reasonable
1-13 and do not impose a greater restraint than is necessary to protect
1-14 the goodwill or other business interest of the promisee.
1-15 (b) A covenant not to compete is enforceable against a
1-16 person licensed as a physician by the Texas State Board of Medical
1-17 Examiners if such covenant complies with the following
1-18 requirements:
1-19 (1) the covenant must:
1-20 (A) not deny the physician access to a list of
1-21 his patients whom he had seen or treated within one year of
1-22 termination of the contract or employment;
1-23 (B) provide access to medical records of the
1-24 physician's patients upon authorization of the patient and any
2-1 copies of medical records for a reasonable fee as established by
2-2 the Texas State Board of Medical Examiners under Section 5.08(o),
2-3 Medical Practice Act (Article 4495b, Vernon's Texas Civil
2-4 Statutes); and
2-5 (C) provide that any access to a list of
2-6 patients or to patients' medical records after termination of the
2-7 contract or employment shall not require such list or records to be
2-8 provided in a format different than that by which such records are
2-9 maintained except by mutual consent of the parties to the contract;
2-10 (2) the covenant must provide for a buy out of the
2-11 covenant by the physician at a reasonable price or, at the option
2-12 of either party, as determined by a mutually agreed upon arbitrator
2-13 or, in the case of an inabilility to agree, an arbitrator of the
2-14 court whose decision shall be binding on the parties; and
2-15 (3) the covenant must provide that the physician will
2-16 not be prohibited from providing continuing care and treatment to a
2-17 specific patient or patients during the course of an acute illness
2-18 even after the contract or employment has been terminated.
2-19 SECTION 2. This Act applies to a covenant entered into on or
2-20 after the effective date of this Act.
2-21 SECTION 3. This Act takes effect September 1, 1999.
2-22 SECTION 4. The importance of this legislation and the
2-23 crowded condition of the calendars in both houses create an
2-24 emergency and an imperative public necessity that the
2-25 constitutional rule requiring bills to be read on three several
2-26 days in each house be suspended, and this rule is hereby suspended.
_______________________________ _______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 3285 was passed by the House on May
4, 1999, by a non-record vote.
_______________________________
Chief Clerk of the House
I certify that H.B. No. 3285 was passed by the Senate on May
26, 1999, by the following vote: Yeas 30, Nays 0.
_______________________________
Secretary of the Senate
APPROVED: _____________________
Date
_____________________
Governor