Connecticut Legislature Passes Bill Limiting Physician Non-Compete Agreements

The Connecticut legislature recently passed Public Act No. 16-95 (PA 16-95), which aims to increase competition among health care providers by, among other things, restricting physician non-compete agreements. Though passed by both houses of the legislature, PA 16-95 has not yet been signed into law by Governor Dannel P. Malloy. If signed by Governor Malloy, PA 16-95 will become effective on July 1, 2016.

PA 16-95 defines a covenant not to compete as a provision in an employment agreement or other agreement that establishes a professional relationship with a physician that restricts the physician’s right to practice medicine in Connecticut after the agreement has been terminated. Under PA 16-95 a covenant not to compete that involves a physician will be valid and enforceable only if it is (1) necessary to protect a legitimate business interest; (2) reasonably limited in time, geographic scope, and practice restrictions; and (3) otherwise consistent with law and public policy. The party seeking to enforce the covenant not to compete has the burden of proving these elements.

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