Reconciling Restrictive Covenant Agreements With Physician Departure Notices

Sep 26, 2022
Munsch Hardt Legal Health Care Update

While physician restrictive covenants, such as non-compete and non-solicitation agreements, are common within the Texas health care market, their reach is heavily regulated by the Texas Medical Board (TMB). A physician restrictive covenant may not restrict access to a list of patients the physician has seen or treated within the year, nor may it deny a physician access to his or her patients’ medical records. However, the TMB regulations stop short of explicitly requiring a practice to provide a departing physician with the relevant patients’ contact information.  This seemingly inconsistent approach raises many questions for physicians and practices alike.  What happens when a physician chooses not to buy out his or her restrictive covenant but needs to comply with departure notice requirements? When does the circulation of departure notices cross over from compliance to violation of a restrictive covenant agreement? 


The TMB regulations provide “when a physician retires, terminates employment, or otherwise leaves a medical practice, he or she is responsible for”, among other things, “ensuring that patients receive reasonable notification and are given the opportunity to obtain copies of their records or arrange for the transfer of their medical records to another physician[.]” TMB regulation 165.5(b)(2)(A)-(C) further states that notice shall be accomplished by:

  • Either:
  1. Posting such notice on the physician's or practice website; or
  2. Publishing notice in the newspaper of greatest general circulation in each county in which the physician practices or practiced and in local newspaper that serves the immediate practice area; and
  • Placing written notice in the physician's office; and
  • Notifying patients seen in the last two years of the physician's discontinuance of practice by either:
  1. Sending a letter to each patient; or
  2. Sending an email to each patient, in a manner that is compliant with state and federal law.

Although the applicable regulation prohibits the remaining physicians in the practice from interfering with a departing physician “posting notice and the sign,” the regulations are silent as to how far a practice must go to facilitate or assist a physician with the circulation of required departure notices. 

For example, does the fact that Section 165.5(b)(2)(A) offers two notice alternatives, including newspaper publication, mean that the practice can force a departing physician to post his or her departure notice in the newspaper rather than on the practice’s website? Probably not. 
Section 165.5 explicitly prohibits the practice from preventing a physician from “posting notice and the sign” (emphasis added). Under the regulations, “posting notice” on the website is distinguished from posting “the sign” in the office. The text of the regulations suggests that posting the departure sign in the office does not absolve the practice from posting the departure notice on the website. And Section (A) suggests the method of notice, as between the practice’s website or the local newspaper, is the physician’s election. 

Similarly, the practice is likely prevented from providing only one contact method for a patient. The regulation’s permissive language suggests that a departing physician may choose to provide a departure notice either by e-mail or letter. It is the physician’s decision, not the practice’s.

In order to avoid confusion about a practice’s obligations when a physician with a restrictive covenant separates from the practice, it is recommended that the practice require the physician to elect his or her preferred methods of disseminating the departure notices and incorporating those choices into the physician’s employment contract. While a practice cannot require a physician to choose a particular method of notice, by incorporating the elections into the contract, the practice can understand its obligations at the beginning of the employment relationship. And, of course, if a physician is subject to a restrictive covenant, the physician is prohibited from using the patients’ contact information for purposes outside of communicating his or her departure notice.

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