Tenn. Supreme Court shoots down non-compete clauses for MDs

November 1, 2005

Tennessee's highest court recently ruled that a non-compete agreement between a physician and his former employer, a private medical practice, was unenforceable.

Tennessee's highest court recently ruled that a non-compete agreement between a physician and his former employer, a private medical practice, was unenforceable. The court held that patients' right to receive continued care from their chosen physician outweighed a medical practice's need to protect its business interest.

The case involved internist David Udom, MD, and his former employer, Murfreesboro Medical Clinic. Dr. Udom signed an employment agreement in 2000 that included a non-compete clause prohibiting him from practicing medicine within a 25-mile radius of the practice for 18 months after the contract was terminated. When the clinic failed to renew the contract, Udom looked for other positions to no avail. As a result, he set up private practice about 15 miles from the clinic.

The clinic sued, and a trial court and appellate court upheld the agreement. The Supreme Court, however, reversed those decisions, relying on the American Medical Association's position that non-compete clauses "restrict competition, disrupt continuity of care, and potentially deprive the public of medical services," according to American Medical News (8/22-29/05).