Posted by: Robert Markette
April 26, 2006

Although the theme of the blog the last week or two has been fraud and abuse, I heard something yesterday that I wanted to address here. I heard an attorney opine that in the home care context non-competition agreements were nice to have, but for public policy reasons, they were not enforceable. The attorney offered the opinion to a home care provider that, public policy favored patient’s choosing providers and, therefore, a court would not enforce a non-compete against a former employee who stole the providers patients.

Although I will start with the caveat that each situation is unique, most jurisdictions will enforce a non-compete agreement in the health care industry. (Of course, there are a few states that simply do not allow non-competition agreements, regardless of the industry.) For example,in Indiana, one of the biggest areas outside of beauty salons for non-competition agreements is physician practices. Such agreements are routinely enforced, over the objections of the physician that it interferes with patient choice. I always describe it as the patient is free to choose their agency, they are not free to choose the specific caregiver. (Even CMS recognizes that agencies are harmed when an employee goes to work for a patient directly and that some kind of remedy is appropriate.)

In home care, your aides, nurses, and other caregivers are your contact with your patients. These employees become the face of your agency. If they decide to leave, it is relatively easy for them to use your agencies good will to their advantage and take patients with them; unless you have a properly drafted non-compete agreement in place.

When you are trying to enforce a properly drafted non-compete, the defense may raise public policy. For example, in Indiana, public policy is one factor in enforcing a non-compete. However, the fact that you are a health care provider trying to stop an employee from stealing patients is in most cases not an automatic bar to enforcement.

I can say that I have seen certain sympathetic cases were the court refused to grant an injunction on public policy grounds. However, the same court found the employee to have breached a non-compete agreement and awarded damages and attorney’s fees to my client as a result. But the court’s decision to not grant injunction was, in my opinion, directly related to certain specific facts in the case.

As a home care provider, a non-competition agreement is one of the most valuable agreements to have in place with your employees. Given the scarcity of nurses and the competition amongst providers, it not unusual to have employees try to take your clients to a competitor. A properly drafted non-competition agreement makes stopping this kind of employee activity much simpler.

This post deals primarily in generalities, the specifics may change depending upon in which state you operate. You should discuss a non-competition agreement with your attorney. However, if an attorney tells you that because you are in health care you will not be able to enforce such an agreement, you should consider getting a second opinion.

Finally, for those of you in Indiana that are still on the fence about going to IAHHC’s annual meeting, on Thursday, May 4, I will be giving a presentation on non-competition agreements in home care. You can obtain more information by going to IAHHC’s website.

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