Tag Archives: Healthcare

State Bill Would Limit Restrictive Covenants With Physicians

Contributed By Jeffrey Glass, May 11, 2021

Historically, a majority of states have allowed employers to use restrictive covenants with physicians—and only a handful of states (among them: Delaware, Massachusetts, and Rhode island) have prohibited that practice in whole or in part. However, as discussed in recent blogs, the current trend is for state legislatures to pass new laws that regulate and limit non-compete agreements, often as they relate to lower wage employees or employees below certain income thresholds.

Now, in what may be a harbinger of future legislative efforts to regulate restrictive covenants in the health care industry, the State of Louisiana is considering a bill that would specifically limit restrictive covenants for physicians.

The legislation at issue, Louisiana House Bill No. 483, would completely ban any type of contract that restricts the practice of medicine by “primary care physicians,” a term the bill defines as including doctors practicing family medicine, general internal medicine, general psychiatry, general pediatrics, obstetrics, and gynecology. It would also ban such agreements for any physician employed by the state, such as a state university hospital.

The legislation also sets limits on contracts that restrict the practice of medicine by “physician specialists,” which includes any physician not included in the definition of “primary care physician.” For “physician specialists,” a restrictive agreement would become unenforceable when the physician has put in three years of service to the employer. Practitioners sometimes call this type of arrangement a “burn off” restriction. Such restrictions are viewed as a way to allow the employer to realize the value of its investment in the employee over time, while allowing the employee to eventually be free of the post-employment restrictions.

The bill also sets limits for buy-out clauses for physician specialists. These are clauses where the physician or the new employer can pay money to the former employer to release the physician from the restrictions. The bill caps buy-out payments at the physician’s annual salary for the first year of the restriction, and provides that payments for any additional years are reduced on a pro rata basis.

Finally, the bill sets certain new rules for both “primary care physicians” and “physician specialists,” i.e., all physicians. The bill provides that, where any physician is terminated without cause by the employer, the restrictive covenant is unenforceable. It further provides that no restrictive covenant may restrict a physician from practicing within a “restricted geographic area” for a period of more than two years. “Restricted geographic area” is defined as the parish of the physician’s primary office location and up to two contiguous parishes. “Parishes” are Louisiana local government districts similar to counties.

This legislation would significantly change Louisiana law as it applies to physicians. Currently, Louisiana, like the majority of states, allows such restrictions to be used with physicians provided certain conditions are met. The new legislation would completely ban such agreements for primary care physicians and set significant limits on the use of such agreements with physician specialists.

We will keep readers apprised of further developments with the Louisiana legislation, as well as legislation in other states related to restrictive covenants in the health care industry.

Amazon, Berkshire Hathaway and JP Morgan Name CEO in New Venture that Could Change Healthcare for Employers

Contributed by Suzannah Wilson Overholt, June 20, 2018

As promised earlier this year, we have an update regarding the new health care company being formed by Amazon, Berkshire Hathaway and JPMorgan Chase, which still lacks an official name.  In February, Warren Buffett announced that a CEO would be named within a year.  The group later announced that a search was underway, and then, in early June, announced that a new CEO had been identified and would be named in two weeks.

12837750 - stethoscope wrapped around health insurance policies, soft focusTrue to their promise, on June 20, 2018, the triumvirate of Warren Buffett (Berkshire Hathaway), Jeff Bezos (Amazon) and Jamie Dimon (JPMorgan Chase) announced that Dr. Atul Gawande will serve as CEO of the new company starting July 9.  Dr. Gawande currently practices general and endocrine surgery at Brigham and Women’s Hospital and is a professor at Harvard’s School of Public Health and Medical School. He is also the founding executive director of Ariadne Labs, which, according to the Ariadne Labs website, is a joint center between Brigham and Women’s Hospital and Harvard’s School of Public Health.  Its mission is to “create scalable health care solutions that deliver better care at the most critical moments in people’s lives, everywhere.” The web site indicates that Dr. Gawande is also chairman of Lifebox, “a nonprofit reducing surgical deaths globally.” CNBC reported that Dr. Gawande will not be giving up his positions at Harvard or Brigham and Women’s Hospital and is transitioning to the position of chairman of Ariadne Labs.

When initially announced in January, the primary purpose of the new company was portrayed as an effort to reduce health care costs for employers. The appointment of Dr. Gawande adds a bit more insight into how that goal may be achieved. According to Bloomberg, the selection of Dr. Gawande has led analysts to conclude that the new company will take an expansive look at how to approach fixing health care.  In a letter to his shareholders, Dimon indicated that the new company’s agenda will include aligning incentives among doctors, insurers and patients; reducing fraud and waste; giving employees more access to telemedicine and better wellness programs; and figuring out why so much money is spent on end-of-life care. Some have been critical of his statements, indicating that they are focused on the wrong issues.

The new company will be headquartered in Boston, most likely because that is where Dr. Gawande is located. Bloomberg reported that additional details such as the size, budget and authority of the new company are still not available. However, it will be “an independent entity that is free from profit-making incentives and constraints.”  We will continue to monitor this and provide updates.

Employer Mandates Now Delayed Until 2016!

Contributed by Rebecca Dobbs Bush

The Affordable Care Act (“ACA”) originally scheduled the employer mandates to take effect in 2014.  Then, on July 2, 2013, the White House announced that it would delay enforcement of the employer mandate provisions from 2014 to 2015.  Now – in line with the over-arching theme of the ACA which seems to be last minute postponement of regulations frustrating those proactively trying to ensure compliance — the IRS has now released new guidance further delaying the employer mandate until 2016 for those employers with less than 100 full-time employees.

Employers with more than 100 full-time employees were provided with some relief as well.  Instead of following the 95% test for determining whether they “offer” coverage to all full-time employees, these employers will now only need to offer coverage to 70% of their full-time employees during 2015.

The 227-page guidance from the IRS issues some clarification in regards to several other areas associated with the employer mandate provisions:

  • Clarification on several categories of employees such as volunteers, educational employees, seasonal employees, student workers, adjunct faculty, airline industry employees, on-call employees, home care workers, agricultural employees holding H-2A and/or H-2B visas, and cruise ship workers
  • Transitional relief – clarification and guidance on a phase in of the employer mandate provisions
  • Clarification on the identification of “full-time” employees
  • Further interpretation on the look-back, measurement and administrative period applied to “variable” hour employees, including those employed by temporary staffing firms
  • Clarification on the “affordability” safe harbors for employers

Additional delays and transition rules for non-calendar year plans and dependent coverage

Ironically, Health Care Reform continues to increase in complexity with each effort at clarification.

To read the full 227-page rule, please click here.  As this is a hot topic, we would like to alert you to an upcoming presentation to discuss Healthcare Reform Updates on February 19th in Bolingbrook, IL.  More information can be found here.