Cardiologists Released from Non-Compete Restrictions

The Federal Trade Commission (FTC) has issued a proposed order that will allow up to 10 cardiologists employed by Renown Health to avoid the “non-compete” restrictions in their employment contracts.  The proposed order will settle allegations that the non-compete provisions unlawfully restrain competition in violation of the antitrust laws.

Renown Health is the largest provider of acute care hospital services in northern Nevada.  After it acquired two competing medical groups – Sierra Nevada Cardiology Associates (SNCA) and Reno Heart Physicians (RHP) – Renown Health became the employer of virtually all the cardiologists in the Reno area.

The cardiologists’ employment contracts with their former employers included "non-compete" provisions.  When those employment contracts were assigned to Renown Health as part of the acquisitions, they effectively prevented the cardiologists from joining medical practices that competed with Renown Health.

The FTC issued an administrative complaint against Renown Health alleging that continued enforcement of the non-compete provisions would violate the federal antitrust laws.

According to the FTC's complaint, Renown Health's acquisitions created a highly concentrated market for the provision of adult cardiology services in the Reno area.  The complaint alleged that the consolidation of the competing practices into a single cardiology group would eliminate competition based on price, quality, and other terms.  In addition, according to the complaint, the consolidation would increase the bargaining power that Renown Health has with insurers, and this may lead to higher prices for adult cardiology services in the Reno area.

The proposed order will temporarily suspend the non-compete provisions currently in place with the cardiologists.  Up to 10 cardiologists will be released from the non-compete restrictions, provided that they intend to continue to practice in the Reno area for at least one year and other conditions are met.

If fewer than six cardiologists have decided to leave Renown Health after 60 days, then Renown Health must continue to suspend the non-compete provisions until at least six cardiologists have accepted offers with competing practices in the Reno area.  At any time, Renown Health may ask the FTC to end the release order if 10 of its cardiologists have left for competing practices.

Non-compete and non-solicitation agreements are generally enforceable unless they are unreasonable in scope or duration, or they unreasonably restrain competition in violation of the antitrust laws.  If you are facing a dispute over a non-compete or non-solicitation clause, you should consult with an experienced lawyer immediately to protect your rights.  To schedule a free and confidential consultation by telephone or in person, call my office today at (917) 652-6504 or click here to communicate with me via email.

John Howley
New York, New York

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