The unique relationship between a provider and a patient is central to the provision of quality healthcare. The American Medical Association (AMA) maintains that this relationship is “based on trust, which gives rise to physicians’ ethical responsibility to place patients’ welfare above the physician’s own self-interest or obligations to others.” AMA Opinion 1.1.1. The AMA also believes that a physician should be “free to choose whom to serve, with whom to associate, and the environment in which to provide medical care.” AMA Principle VI.
Because of these ethical concerns, the AMA is of the opinion that physicians should not enter into covenants that unreasonably restrict the right of a physician to practice medicine for a time or place after the end of a contract, where those covenants do not make “reasonable accommodation” for a patient’s choice of physician. AMA Opinion 11.2.3.1. Similarly, the AMA states that physicians in training should not be asked to sign covenants not to compete as a condition of a residency or fellowship program.
In 2005, the Idaho Supreme Court considered the question of whether Idaho would follow other states in barring non-compete covenants as applied to physicians. In Intermountain Eye & Laser Centers, PLLC v. Miller, the Court decided not to broadly prohibit non-compete covenants on physicians. While the Court agreed that patients have a valid interest in choice of physician and continuity of care, the Court found that this interest must be weighed against the freedom of physicians and their employers to contract. The employer’s interests in enforcing a non-compete covenant had to be limited by the patient’s interest in access to the provider of their choice. In the end, the Court sent the question back to the trial court to determine whether that particular prohibition on employment was broader than necessary to protect the legitimate interests of the employer.
Later, in 2008, the Idaho Legislature enacted Idaho Code sections 44-2701 to 2704, establishing a statutory framework for the analysis of covenants not to compete in Idaho. That statutory framework is generally consistent with prior Idaho non-compete law, while encouraging Courts to find ways to make the covenants enforceable, including by modifying the covenant to make it more reasonable. That framework requires that a non-compete covenant be enforced “if the agreement or covenant is reasonable as to its duration, geographical area, type of employment or line of business, and does not impose a greater restraint than is reasonably necessary to protect the employer’s legitimate business interests.” Idaho Code 44-2701.
In 2022, the Idaho Supreme Court again took up this issue of non-compete covenants against physicians, in Blaskiewicz v. Spine Institute of Idaho, P.A. In Blaskiewicz, the Court faulted the district court for failing to examine the effect of the 2008 Idaho statute on the earlier holding in Intermountain Eye. The Court reversed the summary judgment in favor of the physician, and sent the case back to the district court for further consideration.
This does not mean that the Idaho statute undermined the important health care priorities articulated in Intermountain Eye. The principles favoring patient choice in Intermountain Eye are not inconsistent with the Idaho legislation providing the framework for non-compete covenants. The Idaho statute requires that a non-compete covenant “not impose a greater restraint than is reasonably necessary to protect the employer’s legitimate business interests.” Idaho Code 44-2701. Similarly, Intermountain Eye provided that the interests of the physician’s employer would be limited by the interests of the patient in physician choice. If these two sources are understood to be consistent, it would not be a “legitimate” interest of an employer to limit patient choice if no other employer interests were proven. In other words, the rights of patients to choose their provider should be considered in determining what interests of an employer are “legitimate.”
For example, in Blaskiewicz, the Court examined whether the physician’s patients had come from the employer’s efforts or from the physician’s capabilities. The employer would have less of a legitimate business interest in those patients who had come to the physician because of the patient’s choice of finding the physician’s unique skill set, and the employer would have more of a legitimate business interest in those patients who had come to the physician from relationships the employer had before the physician began practicing.
Similarly, the Court in Blaskiewicz applied the statutory requirements that the covenant be “reasonable as to its duration, geographical area, type of employment or line of business.” Idaho Code 44-2701. If the covenant extended beyond the type of medicine practiced while the physician had worked for the employer, the statute would require the district court to limit the agreement to restrict only the type of medicine he had performed while with the employer. Again, this acts to preserve patient choice while protecting the employer’s interests.
In 2005, Intermountain Eye provided some important principles for the consideration of the validity of non-compete covenants as applied to physicians and other health care providers. Nothing in the 2008 Idaho statute contradicted those principles. Instead, the analysis of non-compete covenants in the Idaho health care context requires the application of the Intermountain Eye principles within the framework of the 2008 non-compete statute. Both Intermountain Eye and the 2008 statute require a careful analysis of the employer’s “legitimate business interests” and a determination of whether the non-compete covenant is broader than “reasonably necessary” to accomplish those interests. The covenant can be modified or set aside if either the employer’s interests are not legitimate or if the covenant is broader than needed to meet those interests.
Intermountain Eye still applies under Idaho Code 44-2701, because Intermountain Eye assists in the determination of whether the employer’s interests are legitimate and whether the covenant is the least restrictive means of serving the employer’s interests.
Parsons Behle & Latimer’s healthcare attorneys are deeply experienced in assisting medical providers and facilities in navigating all aspects of a complicated legal healthcare landscape. Let us know how we may assist you.
