AUA 2023: Non-Competes: Anti-Competitive or Necessary?

( During the Society of Academic Urology meeting, Pamela D. Tyner, Senior Legal Counsel at Houston Methodist Health System, presented an overview of physician non-compete clauses, which have been a media focus recently. She began by providing a background of the covenant to not compete, aka non-competes. These provisions protect an employer from a physician competing for patients in the same geographic area for a competitor practice or health system. Generally, there is geographic restriction of a certain mileage from the current practice location, and is usually in effect for one year after leaving employment. Importantly, a buy-out option to waive or remove the non-compete must be part of the agreement.

Currently, state law determines the structure and permissibility of the non-compete clause, but in all cases, the provision must be reasonable to enforce from a standpoint of geographic and timeframe restrictions.


Tyner then discussed the recent Federal Trade Commission (FTC) proposed rule on non-compete clauses. On January 5, 2023, the FTC announced that they were consideration a ruling that bans employers from including and enforcing non-compete clauses in all contracts. Justification for the stance is based on the fact that non-competes are considered an unfair method of competition, thereby violating Section 5 of the Federal Trade Commission Act. The public commenting period, which ended in mid-April, saw over 26,000 comments submitted, and has been a major media outlet focus. She mentioned that the American Hospital Association was opposed to the ban, and even if implemented, could potentially see delays from significant legal challenges.

State by state, there is emerging legislation to reframe non-compete clauses. For example, Tyner shared two bills that are being considered in Texas. One, House Bill 3411, reduces the maximum geographic restriction to just give miles. Another, House Bill 3139, places caps on the use of non-competes, using a salary cutoff of $250,000.

Tyner mentioned that, even with non-compete clauses in place, physicians and groups are using new methods to overcome the challenges associated with these provisions. She proposed the idea of competitor organizations buying out the non-compete agreements, negotiated in the contract like a signing bonus, which may be a way forward for physician’s who have non-competes in place. She ended by sharing her stance on the issue, reinforcing that she felt non-competes are essential to faculty recruitment and retention. During the Q&A period, the audience challenged that stance, but the way forward remains to be seen pending the FTC final ruling.

Presented by: Pamela D. Tyner, Senior Legal Counsel, Houston Methodist

Written by: Ruchika Talwar, MD, Urologic Oncology Fellow, Vanderbilt University Medical Center, during the 2023 American Urological Association (AUA) Annual Meeting, Chicago, IL, April 27 – May 1, 2023