Proposed Florida Laws Target Physician Non-Competes

Non-compete agreements are generally enforceable in Florida, if they are justified by a legitimate business interest and they are reasonable in time, area and line of business.  However, a 2019 law invalidated non-compete agreements with certain physicians.  Under Section 542.336, Florida Statutes, non-compete agreements with medical doctors and osteopathic physicians are void and unenforceable if the physicians practice a specialty in a county where all of the physicians in that specialty are employed or contracted by a single entity.  This law does not affect non-compete agreements with physicians in most of Florida’s 67 counties.  However, two bills proposed in the Florida legislature would amend Section 542.336 to invalidate non-compete agreements with many more physicians throughout the state.

House Bill 11 is the more far-reaching of the two bills.  It would amend Section 542.336 to invalidate any restrictive covenant with a physician “which prohibits a physician from practicing medicine within a geographic area for any period of time after the termination of a contract, partnership, employment, or professional relationship.” Under HB 11, all non-compete agreements with physicians would be void and unenforceable as of July 1, 2024. 

Senate Bill 458 would also amend Section 542.336 to broaden its reach.  Like HB 11, SB 458 would invalidate non-compete agreements with physicians following the termination of a contract, partnership, employment or professional relationship. In addition, SB 458 specifically includes termination of an “independent contractor arrangement.” 

Unlike HB 11, SB 458 makes an exception for certain restrictive covenants.  Under SB 458, the statute would not invalidate restrictive covenants related to:

• Research conducted by the physician under the terms of a contract or in furtherance of a partnership, employment or professional relationship, provided that the restrictive covenant does not impair the continuing care and treatment of patients who were part of the research;
• Physicians whose individual compensation totals at least $160,000 per year;
• Physicians who have an ownership interest in a practice or an affiliated entity of a practice (such as a management services organization or subsidiary), or who have sold or otherwise transferred an ownership interest in a practice. 

Another significant difference from HB 11 is that SB 458 would only apply to restrictive covenants entered into on or after July 1, 2024.  Non-competes in existence prior to July 1, 2024 would not be affected under the Senate bill.

HB 11 and SB 458 were filed were filed prior to the 2024 legislative session, and both have been referred to several committees.  The regular 2024 legislative session started on January 9, 2024 and runs for a period of 60 days.  Hospitals, group practices and other entities that employ, or contract with, physicians in Florida and that utilize non-compete agreements will want to keep an eye on both bills.  Dinsmore healthcare attorneys will continue to monitor for any developments.