The Louisiana Legislature restricts non-compete agreements for physicians

Quick hits

• Act No. 273 amends La. Rev. Stat. § 23:921, Louisiana’s non-compete law, to limit the non-compete restrictions allowed in physician contracts.
• Any contract that prevents a general practitioner from practicing medicine shall expire three years after the effective date of the contract and all other physicians five years after the effective date of the contract. No non-competition clause may be included in any follow-up agreement.
• The non-compete agreement must specify the parish where the physician’s primary practice is located and no more than two contiguous parishes in which the physician may be prohibited from participating. The law does not discuss how a doctor’s “main location” is determined.
• The non-competition clause may not last longer than two years from the termination of the employment relationship.
• The provisions of Law No. 273 apply to any contract executed on or after January 1, 2025, and to contracts already in force on that date.

Who does Law No. 273 apply to?

Law No. 273 applies to “primary care physicians” as well as to all other physicians, but with different regulations for each. “Primary care physicians” are defined as physicians who practice primarily in these areas:

• General family medicine
• General internal medicine
• General pediatrics
• General obstetrics
• General gynecology

The deed doesn’t apply to any physician employed or under contract with a rural hospital, as defined by the Rural Hospital Preservation Act, La. Rev. Stat. § 40:1189.1, etc. Rural hospitals generally have no more than sixty hospital beds and are located in a parish or municipality with a low population, as defined by law. Rural hospitals do not include long-term care hospitals, rehabilitation hospitals or freestanding psychiatric hospitals.

Restrictions on Non-Compete Agreements for Physicians

Law No. 273 provides that any contract or agreement with a general practitioner that contains a provision that prevents the general practitioner from practicing medicine shall expire three years after the effective date of the contract or agreement. Any subsequent contract or agreement concluded after the initial three-year term may not contain non-compete clauses. For all other physicians, any contract that prevents the physician from practicing medicine shall expire five years after the effective date of the contract, and any subsequent contract may not contain non-compete clauses.

If a contract or agreement is terminated within the initial three- or five-year term, the physician may be prohibited from competing with the employer in the parish where the physician’s principal practice is located and in no more than two contiguous parishes where the employer is situated. carries on a similar business, which must be specified in the contract or agreement. The non-competition clause in the contract or agreement cannot exceed a period of more than two years after termination of the employment relationship.

With Governor Landry’s signing into law on May 28, 2024, the provisions of the Act now apply to all applicable contracts entered into on or after January 1, 2025. For all existing contracts, the initial three- or five-year term provided for in the Act will begin to run on January 1, 2025, and the geographic provisions will also apply on that date.