Health care and non-compete agreements

[Written by Kay Olson, and crossposted from The Gimp Parade with Kay’s kind permission].

Two years ago this week I got caught up in a legal dispute that briefly threatened my life. Obviously, I’m still alive, but a version of what happened to me could happen to anyone who consumes health care in America, so I figure people should know a little about it.

First, a little background on me: Because I have a sort of muscular dystrophy that weakens my diaphragm muscles, I’ve used a trach and ventilator to breathe for the past six years. Generally, lungs react to this artificial breathing set-up by making secretions that must be suctioned out of the lungs several times each day by a trained assistant using sterile gloves, a sterile catheter and a suction machine. I have 24-hour home care assistance for this and other help I need. But the most important thing my nurses do is to keep me breathing, put the circuit tubes between my trach and my vent back together if they fall apart, troubleshoot vent alarms and keep me from drowning in my own secretions. Life is better than you might think, but I have to have this care to keep breathing.

So. This dispute between the business partners of my vent-specializing home health care agency eventually led to my choosing the management of one set of partners over another, and that’s when their legal dispute began to directly involve me. At that time my nurses all worked only with me within the agency. And I’m the only vent client my metro-area-based agency has had in my small town 60 miles outside of the Twin Cities. So my nurses followed the job and switched agencies with me in order to keep getting a paycheck. The agency I departed sued all my home care nurses for breach of a non-compete agreement (NCA). They also sought a temporary restraining order (TRO) to keep all my nurses from showing up at my house to work and, you know, keep me breathing.

Are you familiar with non-compete agreements? They are contracts between an employer and employee that restricts what the employee can do after they leave the employer for a different job. It’s meant to protect an employer’s business, client list, company secrets, etc. It requires the employer provide the employee “reasonable compensation” and typically restricts competing work within a geographical area for a set time.

It used to be that NCAs were mostly just for tech companies protecting research and development secrets, but increasingly these agreements are used by all kinds of businesses now, including for-profit health care businesses. What this means for ANY health care consumer is this: in the terms of an NCA all clients/patients are considered business assets. If your health care provider — primary care physician, psychiatrist, obstetrician, oncologist, surgeon, dentist, etc. — is suddenly barred from having you as a client because they change partnerships/clinics/employers and there’s an NCA, you have no legal standing in a dispute between employer and employee. (Your provider could also suddenly lack access to your medical records, by the way — one of many reasons you should always have copies of the most vital aspects of your medical history.) Need some sort of life-saving medical care and want the professional who knows your case? Your individual preference to stay with that medical professional likely will be no part of the legal discussion about financial harm to the employer and the livelihood of the employee.

An exception is if the legal discussion includes consideration of the “public welfare”. For example, if the medical specialty of the employee in question is rare in your geographical area, an NCA may be disallowed or limited in scope to protect the public welfare. And some states disallow NCAs involving all physicians. But the “private welfare” of one individual client/patient is not “the public welfare” and your right as an individual to choose your health care provider may not be considered.

State policies vary wildly. All employment NCAs in California and North Dakota are disallowed. Florida very seriously favors employers over employees. Colorado, Delaware, Illinois and Kentucky disallow NCAs for all physicians, Tennessee and Texas protect some physicians, New Jersey disallows NCAs for psychologists, and Massachusetts disallows for physicians, nurses, psychologists and social workers.

I’m in Minnesota and my nurses being sued as third-party defendants for violation of their NCAs was considered by the court a viable part of a big messy case. I have a lot I could say about that messy case that complicated the lives of hard working people just trying to make a modest living by giving me knowledgeable and competent health care, but I’ll try and stick to the topic of NCAs and health care here.

In my situation, I wrote an affidavit to the court about how my life would be endangered by the temporary restraining order (I needed both a lawyer and a notary public for that.) Then I showed up in court for the hearing when the TRO was being considered, even though — and I find this both galling and very key to my whole point — without me present, discussion of the TRO and my life-saving daily care would have gone on without me. Remember, as neither plaintiff or defendant in this case I had no legal right to participate. Although I’d like to believe the judge wouldn’t have ruled on a TRO that interfered with life-saving medical care, I suspect it was my presence in the courtroom that day (with my vent huffing and puffing loudly) that got my former agency to immediately withdraw the request for the TRO. I do not know for sure if the judge ever read my affidavit.

After months and months, the full case settled and the question of the NCAs and their validity was never ruled on. There’s a Minnesota Home Care Bill of Rights (MN statutes, section 144a.44.) that states that any client has “The right to choose freely among available providers and to change providers after services have begun, within limits of health insurance, medical assistance, or other health programs.” The conflict between that statute and an NCA was likewise not adjudicated or even debated at the court dates I attended. In any case, those matters would have been addressed long after the TRO, if the TRO request hadn’t been withdrawn.

Things might have turned out differently. I might not have had a nurse who showed me the complaint she was served. I might have been unable to read it and understand the immediate threat of the TRO. I might not have had access to a lawyer for the affidavit, or a ride to the courthouse to attend the day the TRO was brought before the judge. I might not have had such loyal, brave nurses who stuck with me through months of threats of financial penalties to each of them. I might not have had such an excellent home care agency to choose as I currently have and been stuck under the management of the agency that aimed these troubles at my nurses and me. But because consumers of health care are basically the collateral damage of NCAs, you don’t hear many stories like mine.

In fact, Googling “non-compete and health care” offers mostly lawyers selling their expertise and almost nothing about the clients every enforced NCA against a health care provider must displace. There are a few cautionary tales besides mine, however.

In May 2010, Madeleine Baran of Minnesota Public Radio reported on the story of Nadine Parker and her two daughters. The eight- and ten-year-old girls had been seeing a mental health professional for about a year and were finally experiencing some progress with troubles including bedwetting and self-injury when an NCA came between them and the one counselor they had developed trust in. The only current remedy in Minnesota for these children’s traumatic loss of support appears to be litigation.

[Mental health] advocates also said that the situation serves as a valuable lesson for mental health consumers. Many clients, they said, have no idea that their therapist, case manager or other provider would not be able to see them if the provider switched to a new agency.

“Realistically, the average client is not going to be thinking that far ahead,” [Frederic] Reamer, [a national expert on social work ethics and one of the chief authors of the code of ethics for the National Association of Social Workers] said. “It’s usually, ‘I’m depressed. I need help. Can you help me?’ [Not] ‘Oh, by the way, do you work in a place that has a non-compete?'”

In the 2006 Kansas case Caring Hearts v. Hobley and Hardy, the appellate court upheld the original ruling in favor of the employer and against the defendant home care nurses. In reviewing the issue of “the public welfare” the appellate court stated (italics mine) that “there is no evidence that public welfare would be harmed by enforcement of the agreements. Hobley and Hardy did not present evidence at trial that the desires of any of their former patients would be thwarted if an injunction were issued and they were denied care that they specifically desired to receive from Hobley and Hardy. But even if there were such evidence, the issue is public welfare, not the private welfare of an individual patient.”

Does the court imagine that the elderly clients do not care who provides their health care? The court doesn’t consider it relevant.

So, how to avoid losing your oncologist halfway through your chemo treatments? How to keep the social worker your mentally troubled child is getting support from? How to hang on to the primary care physician who has seen you through the birth of all your children? There aren’t any great answers unless you live in a state that has a statute disallowing NCAs.

But here’s my list of things you can do to protect yourself as much as possible:

Ask your health care provider if they are bound by a non-compete agreement.
Ask if they have any plans to leave the business where they are currently employed.
If possible, choose a provider not bound by any NCA.
Repeat this process if and when you add any new health care provider to your life.
Repeat this process if and when your health care needs become more extensive or dire and continuity of care becomes more vital to your health.
Talk to your elected officials about protecting patient continuity of care by limiting or disallowing NCAs for medical professionals in your state.

Other stuff to know about NCAs:

The American Medical Association believes “restrictive covenants” to be unethical:

Covenants-not-to-compete restrict competition, disrupt continuity of care, and potentially deprive the public of medical services. The Council on Ethical and Judicial Affairs discourages any agreement which restricts the right of a physician to practice medicine for a specified period of time or in a specified area upon termination of an employment, partnership, or corporate agreement. Restrictive covenants are unethical if they are excessive in geographic scope or duration in the circumstances presented, or if they fail to make reasonable accommodation of patients’ choice of physician. (AMA Code of Medical Ethics, Opinion 9.02)

A physician in internal medicine in rural Idaho where doctors are scarce writes about taking a two-year sabbatical as the only reasonable way she can find to escape an NCA.

An academic paper on how NCAs affect the labor market for physicians. (If the math scares you, skip to page 27 for the research conclusions.) Spoiler: States most supportive of NCAs have fewer docs per capita.

In 2005, the Tennessee Supreme Court ruled that NCAs for physicians were against public policy and unenforceable. In response, the state legislature has repeatedly tinkered with statutes mostly having the effect of overruling that court decision and allowing NCAs for most physicians.

One researcher finds that NCAs often derail careers.

For a good primer on NCAs read the paper “The Law and Policy of Non-Compete Clauses in the United States and Their Implications” by University of Illinois professors Jay P. Kesan and Carol M. Hayes.

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9 Responses to Health care and non-compete agreements

  1. 1
    KellyK says:

    Oh my. That’s something I’d never been aware of before and is a major problem. I wish I could say I was shocked that the company your nurses worked for literally tried to kill you. I’m glad it worked out okay for you, and thank you for bringing it to our attention. I’m definitely going to see what the rules are in Maryland.

  2. 2
    Susan says:

    (Your provider could also suddenly lack access to your medical records, by the way — one of many reasons you should always have copies of the most vital aspects of your medical history.)

    No. You, the patient, are the legal owner of your medical records. You may not legally be denied access. They can charge you a (reasonable) amount of money for copying them, but that’s it.

    All employment NCAs in California and North Dakota are disallowed.

    With the qualifier “employment” this is true of California. There are situations where NCA’s are enforced in California, but these involve sales of businesses and split-ups of partnerships.

  3. 3
    CaitieCat says:

    Once again, I am made very glad that I live in a place with single-payer health care. This is nightmare fuel. :/

  4. 4
    Kay Olson says:

    Susan — absolutely right about California. On the access to medical records, that is why I said “your provider could suddenly lack access.” And while it is a client’s right to access her own records, it can get sticky. Someone who doesn’t mind getting a TRO against your life-saving care could easily make other things more difficult than they are supposed to be.

  5. 5
    Susan says:

    Kay, your provider won’t lack access if you get the records and give it to him or her.

    If any holder of medical records of my clients gets “sticky” about forking them over, they will be the recipients of a letter that will burn their hands opening it, and will thereafter very shortly find themselves before a judge. I’ve threatened any number of these people, and they fall into line in a gratifying way when the law is explained to them. ;)

    These people only get away with this behavior because the public at large is not informed about their rights, and get cowed by these medical bullies, who seem to think that a medical education endows them with god-like rights and powers.

  6. 6
    Kay Olson says:

    A provider barred from access to your medical records can’t just be given the extra copies you have if a judge bars the provider from having you as a client. We can go round and round on this. I wouldn’t have been through all I went through if simply having rights meant they were respected. I will say this: Being in possession of my own records instead of relying on someone suddenly hostile to my situation to hand over what was rightfully mine made my situation easier.

  7. 7
    gin-and-whiskey says:

    Oddly enough, NCAs are not permitted for attorneys (at least in my state though I think it’s fairly universal), because they might interfere with the attorney-client relationship.

    I’m not entirely sure why the attorney-client relationship would be privileged over the doctor-client relationship; that doesn’t make sense at first glance. Perhaps it’s because MD licensing is designed to ensure more skills than is attorney licensing: the skill set for “board certified orthopedists” is far higher and far more similar than for “lawyers,” so theoretically they may be more exchangeable…?

    But in any case, two things are probably true:

    1) The medical profession, like the legal profession, could exist without NCAs. It has them now, but they’re not necessary.

    2) The profession would be different. One thing that NCAs do is to increase stability and deter lateral moves (for obvious reasons.) That has some patient benefits as well as costs. It sucks when your doctor/nurse can’t follow you to the practice across the street. But it ALSO sucks when your doctor/nurse packs up and moves to a different practice, or city, and drops you as a patient, because it’s simple for them to do. And that will happen; doctors are self interested just like everyone else. Overall NCAs give more cost than benefit but it isn’t a 100% gain.

  8. 8
    Robert says:

    G&W, I imagine that the fact that the legislatures are stuffed full of lawyers might have some bearing on why you guys don’t have those kinds of restrictions :)

  9. 9
    mythago says:

    No, what we have instead are “conflict checks”. If I represent BigCorp in a lawsuit against gin-and-whiskey’s client OtherCorp, then gin-and-whiskey can’t simply hire me to work for his firm. He might be able to hire me if OtherCorp takes its business elsewhere, and I’m in a totally different area of the firm than the one that handled OtherCorp, and there’s no chance that my work with BigCorp can be used to BigCorp’s disadvantage.

    In other words, this doesn’t have much to do with the legislature (who aren’t practicing attorneys in most cases) as it does to do with various formal and informal ethical constraints.