Since the last update regarding non-compete agreements in healthcare, there have been recent developments over the past few weeks, both in the courts and with the Federal Trade Commission (FTC), that have brought some clarity on restrictive covenants for healthcare professionals. At the federal level, the FTC is ramping up case-by-case enforcement, with a focus on healthcare. At the same time, courts continue to scrutinize restrictive covenants that sideline clinicians or limit patient choice.
This update highlights:
- The recent New Jersey case involving a pediatric neurosurgeon;
- The FTC Chairman’s letter to hospitals and staffing firms; and
- Practical steps physicians and healthcare professionals should take now.
New Jersey Court Rejects Non-Compete Enforcement After Termination Without Cause
A recent decision in New Jersey Brain & Spine v. Vogel illustrates how courts are increasingly reluctant to enforce non-competes when doing so would unfairly burden physicians or restrict access to care.
In this case, the physician, a respected neurosurgeon, was recruited by his employer to build a pediatric neurosurgery program at the university medical center. After seven years of successful practice, the employer terminated the physician without cause and then sought to enforce his non-compete covenant when he continued to practice at the university under a new employment arrangement.
The court refused to enforce the covenant.
Key Takeaways:
- The judge found that the employer’s claims that the physician was terminated “for cause” were inconsistent with the evidence and unsupported by any disciplinary documentation.
- Restricting the physician from practicing pediatric neurosurgery at the only facility in New Jersey capable of supporting his subspecialty would have imposed undue hardship on him and limited patient access.
- Enforcing the restriction after a without-cause termination would have been inequitable, particularly where the physician had not engaged in misconduct or competitive wrongdoing.
Courts are signaling that if a physician is terminated without cause, a broad non-compete is unlikely to hold, especially when it would make it impossible for that physician to continue serving their patient population.
The FTC’s Enforcement Shift From Complete Ban To Targeted Action
At the federal level, the FTC has officially abandoned its 2024 rule that would have banned most employment-based non-compete agreements nationwide. On September 5, 2025, the FTC voted 3 to 1 to withdraw its appeals defending the rule after federal courts struck it down.
Rather than stepping back, the FTC has refocused its energy on enforcement. Under Section 5 of the FTC Act, the agency can pursue companies whose restrictive covenants constitute “unfair methods of competition.”
Recent Developments:
- On September 10, 2025, FTC Chairman Andrew Ferguson sent letters to major healthcare employers and staffing firms urging them to conduct comprehensive reviews of the employment agreements. The letters warned that non-competes which unreasonably limit healthcare professionals’ ability to work, or that restrict patient choice (especially in rural areas), could violate federal law.
- The FTC launched a public Request for Information (RFI) seeking input on how non-competes affect employment opportunities, patient access, and competition in healthcare. Physicians, nurses, and other healthcare professionals are invited to share their experiences through November 3, 2025.
- You can provide feedback by emailing noncompete@ftc.gov or filling out the form located here.
- More information on the RFI, specific information that is requested, and how this information will be used can be found here.
Even though the nationwide rule is gone, the FTC has made clear that healthcare is a priority sector for enforcement. Non-compete agreements that go beyond protecting legitimate business interests, such as trade secrets or narrowly defined patient lists, are at risk.
Practical Steps for Physicians and Healthcare Professionals
Explore Alternative Options
When entering or renewing an employment agreement, ask about less restrictive options, such as:
- A non-solicitation clause that limits outreach to your former patients or referral sources rather than banning you from working completely.
- A confidentiality agreement that protects sensitive business information without limiting your right to practice.
- A buyout or waiver clause that gives you a clear path to exit the restriction if your circumstances change.
Document Your Hardship
If a non-compete agreement would force you to relocate, leave your community, or disrupt continuity of case for your patients, keep documentation. Maintain records of your emails, patient lists, or correspondence showing the impact. Courts and regulators both weigh real-world consequences heavily.
Stay Informed and Speak Up
If you’ve been affected by a non-compete, especially one that limited your ability to practice or provide care, consider sharing your experience through the FTC’s inquiry, linked above. Individual physician stores are shaping how regulators define what is considered “unfair” in the healthcare labor market and needs your feedback.
Conclusion
The FTC’s nationwide ban is no longer on the table, but healthcare remains at the center of federal enforcement focus. Courts are increasingly sensitive to the practical realities physicians face, particularly when restrictive covenants interfere with patient care or penalize doctors who did nothing wrong.
For physicians, this moment represents a shift in leverage. Non-competes are trending towards no longer being presumed enforceable, and regulators are openly questioning their role in healthcare.
Before signing a new agreement (or assuming your existing agreement is set in stone), take time to understand what’s enforceable, what’s fair, and what alternatives exist. Protecting patients and protecting your right to practice are not mutually exclusive goals.
