By: Schwertner S.B. No. 1534
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to restrictions on covenants not to compete for physicians
  and certain other health care practitioners.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 15.50, Business & Commerce Code, is
  amended by amending Subsections (a) and (b) and adding Subsection
  (d) to read as follows:
         (a)  Notwithstanding Section 15.05 [of this code,] and
  subject to any applicable provision of Subsection (b) and Section
  15.501, a covenant not to compete is enforceable if it is ancillary
  to or part of an otherwise enforceable agreement at the time the
  agreement is made to the extent that it contains limitations as to
  time, geographical area, and scope of activity to be restrained
  that are reasonable and do not impose a greater restraint than is
  necessary to protect the goodwill or other business interest of the
  promisee.
         (b)  A covenant not to compete relating to the practice of
  medicine is enforceable against a person licensed as a physician by
  the Texas Medical Board if such covenant complies with the
  following requirements:
               (1)  the covenant must:
                     (A)  not deny the physician access to a list of the
  physician's [his] patients whom the physician [he] had seen or
  treated within one year of termination of the contract or
  employment;
                     (B)  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
  Texas Medical Board under Section 159.008, Occupations Code; and
                     (C)  provide that any access to a list of patients
  or to patients' 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;
               (2)  the covenant must provide for a buyout [buy out] of
  the covenant by the physician in an amount that is not greater than
  the physician's total annual salary and wages at the time of
  termination of the contract or employment [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; and
               (4)  the covenant must:
                     (A)  expire not later than the one year
  anniversary of the date the contract or employment terminated; and
                     (B)  limit the geographical area subject to the
  covenant to no more than:
                           (i)  a five-mile radius, if more than half of
  the area subject to the covenant is located in a county with a
  population of 50,000 or more; or
                           (ii)  a 10-mile radius, if more than half of
  the area subject to the covenant is located in a county with a
  population of less than 50,000.
         (d)  Notwithstanding any other law, a covenant not to compete
  relating to the practice of medicine is void and unenforceable
  against a person licensed as a physician by the Texas Medical Board
  if the physician is discharged without good cause.  For purposes of
  this subsection, "good cause" means a reasonable basis for
  discharge of a physician from employment that is directly related
  to the physician's conduct, including the physician's conduct on
  the job or otherwise, job performance, and employment record.
         SECTION 2.  Subchapter E, Chapter 15, Business & Commerce
  Code, is amended by adding Section 15.501 to read as follows:
         Sec. 15.501.  COVENANTS NOT TO COMPETE AGAINST HEALTH CARE
  PRACTITIONERS. (a) In this section, "health care practitioner"
  means:
               (1)  a person licensed by the State Board of Dental
  Examiners to practice dentistry in this state;
               (2)  a person licensed under Chapter 301, Occupations
  Code, to engage in professional or vocational nursing; or
               (3)  a physician assistant licensed under Chapter 204,
  Occupations Code.
         (b)  A covenant not to compete against a health care
  practitioner is not enforceable unless the covenant:
               (1)  provides for a buyout of the covenant by the health
  care practitioner in an amount that is not greater than the
  practitioner's total annual salary and wages at the time of
  termination of the practitioner's contract or employment;
               (2)  expires not later than the one year anniversary of
  the contract or employment terminated; and
               (3)  limits the geographical area subject to the
  covenant to no more than:
                     (A)  a five-mile radius, if more than half of the
  area subject to the covenant is located in a county with a
  population of 50,000 or more; or
                     (B)  a 10-mile radius, if more than half of the
  area subject to the covenant is located in a county with a
  population of less than 50,000.
         (c)  Notwithstanding any other law, a covenant not to compete
  is void and unenforceable against a health care practitioner if the
  health care practitioner is discharged without good cause.  For
  purposes of this subsection, "good cause" means a reasonable basis
  for discharge of a health care practitioner from employment that is
  directly related to the health care practitioner's conduct,
  including the health care practitioner's conduct on the job or
  otherwise, job performance, and employment record.
         SECTION 3.  Section 15.52, Business & Commerce Code, is
  amended to read as follows:
         Sec. 15.52.  PREEMPTION OF OTHER LAW. The criteria for
  enforceability of a covenant not to compete provided by Sections
  [Section] 15.50 and 15.501 [of this code] and the procedures and
  remedies in an action to enforce a covenant not to compete provided
  by Section 15.51 [of this code] are exclusive and preempt [any]
  other law, including [criteria for enforceability of a covenant not
  to compete or procedures and remedies in an action to enforce a
  covenant not to compete under] common law [or otherwise].
         SECTION 4.  The changes in law made by this Act apply only to
  a covenant not to compete entered into or renewed on or after the
  effective date of this Act. A covenant not to compete entered into
  or renewed before the effective date of this Act is governed by the
  law in effect on the date the covenant was entered into or renewed,
  and the former law is continued in effect for that purpose.
         SECTION 5.  This Act takes effect September 1, 2023.