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ForwardNew FTC Rule on Non-Compete Agreements
Course description
Restrictive covenants, commonly found in physician employment contracts, wield significant influence on employed physicians and the healthcare landscape. They are used in an estimated 40% of physician employment contracts to restrict employees from working in a specific geographic area or for a rival organization. Additionally, many hospitals, health systems, physician groups, insurance companies and pharmacy benefit managers enforce noncompete agreements to prevent former employees from sharing proprietary information with competitors.
In April 2024, the Federal Trade Commission (FTC) finalized a rule that bans most employers from issuing and enforcing noncompete clauses, or restrictive covenants, which could have a wide-ranging impact on the healthcare workforce. Under the FTC's final rule, employers are prevented from issuing noncompete agreements for new hires and from enforcing them in existing contracts, except for senior executives. Employment contracts carried over from the sale of a business are also exempted from the ban.
It's too soon to know what the broader implications are for medicine and healthcare delivery following this significant policy change. Will the absence of restrictive covenants reduce or exacerbate physician shortages in certain areas, contributing to increased healthcare disparities? What impact will this policy have on healthcare costs, including reimbursements for physicians and other healthcare professionals? Balancing the legitimate interests of employers, including physician-owned medical practices, with the professional freedoms of physicians remains a contentious issue, requiring careful consideration of both legal and ethical perspectives.
Learning objectives
At the conclusion of this learning activity, participants will be able to:
- Summarize state law and federal rules on restrictive covenants and non-compete provisions;
- Identify how restrictive covenants affect physicians, medical practices and patients; and
- Discuss how the new FTC rules effect physicians employed in both for-profit and non-profit corporations, as well as their patients
Disclosure
There are no relevant financial relationships with ACCME-defined commercial interests for anyone who was in control of the content of this activity.
CME information
The Illinois State Medical Society is accredited by the ACCME to provide continuing medical education for physicians.
The Illinois State Medical Society designates this live activity for a maximum of 1.00 AMA PRA Category 1 Credit™. Physicians should claim only the credit commensurate with the extent of their participation in the activity.
The Illinois Nurse Practice Act rules deem CME credit provided by approved sponsors as acceptable to fulfill nursing continuing education requirements for licensure. Nurses may claim one contact hour per unit of CME in the state of Illinois.
Additional information
The recommendations contained in this resource are not intended to define conduct that is appropriate in every case, should not be considered as establishing any standard of care, and do not constitute legal advice. Physicians, clinicians and healthcare providers should take care to ensure that all care rendered reflects the best clinical judgment and complies with the laws and regulations of the state or location at which the care was provided.
Thomas Conley, JD
Mr. Conley is Counsel in the law firm of Saul Ewing LLP where he practices in the Firm’s Business and Finance Department and the Healthcare Practice Group. Mr. Conley concentrates his practice in health care, government relations, and regulatory compliance matters.
Over his more than 40 year career, Mr. Conley has represented all types of health care professionals and businesses, including solo practitioners, hospital-based physician groups, large multi-specialty group practices, entire medical staffs, professional societies and their officers, surgical centers, physician-hospital joint ventures, out-patient diagnostic testing and treatment facilities, clinical laboratories and start-up technology companies.
Mr. Conley is a past president of the Illinois Association of Healthcare Attorneys and served on its Board for six years and on its Diversity and Mentoring Committee. He has chaired the Illinois State Bar Association’s Health Care Section Council and the Chicago Bar Association’s Health Care and Hospital Law Committee. He remains active in bar association activities, currently serving on the Illinois State Bar Association’s Standing Committee on Legislation and its Health Care Section Council. Mr. Conley also serves on the continuing legal education committee of the American Society of Medical Association Counsel.
A former appointee to the Illinois Secretary of State’s Business Acts Advisory Committee, he is a founding member of the successor Institute of Illinois Business Law, a nonprofit organization whose mission is to study the operation of laws relating to business activities, to develop proposals for the improvement of such laws and to provide research
and advice to members of the Illinois General Assembly on such laws.
Mr. Conley also served on the Board and Executive Committee of Associated Colleges of Illinois, a nonprofit association of private liberal arts colleges and universities from 2005 to 2015. From 1991 to 2003, Mr. Conley served as Executive Director and outside General Counsel for the Illinois Educational Facilities Authority, a state agency. During his tenure, the Authority issued more than 4 billion dollars in revenue bonds to finance the construction and renovation of facilities for private, not for profit educational and cultural institutions throughout the State of Illinois. Under an appointment by the United States Trustee for the Northern District of Illinois, Mr. Conley has served as
Health Care Ombudsman.
A frequent author and lecturer, Mr. Conley has written and lectured at legal and medical education programs on such topics as professional entities, series limited liability companies, physician/hospital transactions, physician employment agreements, health care compliance, physician perspectives on medical staff bylaws, corporate practice of medicine prohibitions, private equity investment in physician practices and physician burnout.
Mr. Conley is a graduate of DePaul University College of Law and Carleton College. He has been named a Leading Lawyer in Health Care by Leading Lawyers Network and served on its Advisory Board. He has also been named an Illinois Super Lawyer by Law & Politics.
Available Credit
- 1.00 AMA PRA Category 1 Credits™
This activity has been planned and implemented in accordance with the accreditation requirements and policies of the Accreditation Council for Continuing Medical Education (ACCME) through the joint providership of the Illinois State Medical Society and ISMIE Mutual Insurance Company. The Illinois State Medical Society is accredited by the ACCME to provide continuing medical education for physicians.
The Illinois State Medical Society designates this enduring material for a maximum of 1.00 AMA PRA Category 1 Credits™. Physicians should claim only the credit commensurate with the extent of their participation in the activity.
- 1.00 Participation Credit