Wade, Goldstein, Landau & Abruzzo, P.C.

Upcoming Comment Deadline on the 2019 Medicare Physician Fee Schedule Proposed Rule

9/6/2018

On July 27, 2018, Medicare released its proposed rule for the 2019 Medicare Physician Fee Schedule (full text available here) (the “Proposed Rule”). Whereas Medicare makes revisions to the physician fee schedule every year, there are two (2) changes proposed this year which are likely to have a significant impact on practice revenue: (1) changes to billing and reimbursement for Evaluation and Management (“E/M”) codes and (2) changes to the Quality Performance Program (“QPP”) under MACRA.

E/M Coding
Medicare proposes to simplify E/M coding and documentation requirements. Under the current billing methodology, physicians have the option of coding office visits between a Level 1 and a Level 5, depending on the complexity of the patient’s visit. The reimbursement for the office visit increases as the level of complexity increases. However, under the Proposed Rule, all Level 2 through Level 5 physician office visits would be coded at the same level and paid at a single reimbursement rate (between the current Level 3 and Level 4 rate). Given the decrease in reimbursement that will occur for the higher level visits, Medicare also proposes limiting the documentation standards to those currently set for a Level 2 visit.

While this proposal may seek to streamline documentation requirements and E/M coding, it will significantly impact those specialists who often bill for office visits at the higher Level 4 and Level 5 reimbursement levels. In support of this proposal, CMS Administrator Seema Verma stated that “most specialties would see changes in their overall Medicare payments in the range of 1-2 percent up or down from this policy, but we believe that any small negative payment adjustments would be outweighed by the significant reduction in documentation burden.” The estimated impacts cited by CMS apply to Medicare payments within specialties; they do not assess the impact on individual physicians or group practices (e.g., those sub-specialty practices that bill Level 4 and 5 E/M codes on a regular basis). Further, based on the estimated impacts table published with the Proposed Rule, CMS expects some specialties (i.e., OB/GYN) to see a 4% increase while others (i.e., podiatry and dermatology) would face a 4% cut.

QPP Revisions
In addition to losing reimbursement on E/M codes, providers also face reimbursement cuts as a result of proposed revisions to the QPP. The QPP is the new value-based incentive program established under MACRA, which imposes positive and negative payment adjustments on providers based on their participation in the Merit-based Incentive Payment System (“MIPS”) or an Alternative Payment Model (“APM”). As the QPP is rolled out, new parameters are proposed every year. There are several proposed changes in the Proposed Rule that could significantly impact providers. These changes include:

Cutting the bonus points that small practices can earn;
Revising the Promoting Interoperability (“PI”) category to be more consistent with the all-or-nothing (as opposed to sliding scale) methodology under its former Meaningful Use counterpart, making it harder for providers to achieve participation points;
Requiring practices to use the latest version of Certified EHR Technology (“CEHRT”) to meet the PI requirements, which a number of EHR vendors do not yet support;
Increasing the requirements to earn credits for participation in qualified registries; and
Eliminating credits (at a future date) earned for participation in certain registries (e.g., the IRIS Registry).

Whereas CMS is keeping other QPP provisions that assist practices in meeting the thresholds for positive payment adjustments, the changes in the Proposed Rule will make it more difficult to achieve those thresholds.

Comments to the Proposed Rule are due by September 10, 2018. Understandably, a number of societies have or will be submitting comments in opposition to the Proposed Rule. However, if you would like to submit your own comment, you can do so here.

Avoiding Liability for Contracted and Lessee Physicians

8/17/2018

As private equity firms and health systems continue to purchase practices, independent physician practices look for ways to affiliate with one another and expand the services that they provide to patients. For example, general ophthalmologists may lease space to or contract with retina specialists; dermatologists may lease space or contract with a physician to perform Mohs procedures; and multi-specialty groups may lease space to or contract with additional specialists. In those instances, the general ophthalmologist, dermatologist and multi-specialty group want patients to view the contracted and lessee physicians as being a part of their practices. However, if the practice is successful in this goal, they may be opening themselves up to liability for the physicians’ actions.

Across the country, courts have imposed liability on hospitals for the malpractice of non-employed physicians performing services within the hospital. In such instances, the courts looked at whether the physician had “apparent authority” to act on behalf of the hospital. If the hospital was found to have acted in a manner that would cause a reasonable patient to believe that the physician was acting on behalf of the hospital, and the patient relied on that belief when obtaining the physician’s services, the court held the hospital liable for the actions of the physician. In making this determination, the courts looked at factors such as: (1) whether the hospital advertised the physician as being affiliated with the hospital; (2) whether patient registration and consent forms were on the hospital’s letterhead; (3) who was responsible for scheduling the physician’s visits/work hours; (4) whether the patient had a prior, ongoing relationship with the physician; and (5) whether the patient was provided notice of the independent contractor relationship through signage, verbal communications, and/or a written consent form.

Given the increased possibility of injury from hospital procedures, malpractice actions are more often brought against hospitals than independent physician practices. However, in the event that a patient is injured by a physician that is an independent contractor of, or leasing space from, your practice, he/she will likely sue both the physician individually, as well as the practice. In such case, the courts would likely apply the same “apparent authority” test to the relationship between your practice and the physician. Accordingly, it is important to ensure that your practice implements safeguards to avoid responsibility for the non-employed physicians’ actions. Safeguards that you may consider include:

Limit advertising of the physician's services. - Be cautious when including the contracted or lessee physicians on your practice’s website. While it is safest to avoid listing the physicians on the site altogether, we understand that the entire purpose of contracting with and leasing to these physicians is to offer your patients their services. Accordingly, when advertising those physicians’ services, avoid using phrases such as “our team of specialists” or “we offer [specialty] services”. Also, include an express, conspicuous statement that the physicians are not employed by the practice and the practice is not responsible for their actions or omissions.
Avoid using practice letterhead. - Patient consent and registration forms for the non-employed physicians’ services should be on the letterhead of the individual physician or the practice that employs him/her. To the extent necessary (e.g., the patient is a patient of the practice but may require the services of a contracted specialist), include a disclaimer similar to that included on the website. Make sure the disclaimer is conspicuously placed, is not in small or hard-to-read print, and is easily understandable by the patient.
Post signage. - Place conspicuous signage in the office stating that the physicians are not employed by the practice. For example, the front door may include those physicians under a separate practice name which employs them.
Distinguish their appearance. - Consider distinguishing the appearance of your employed physicians from independent contractors and lessee physicians. This may include different scrubs, lab coats or name badges.

In the event that you are found liable for a contracted or lessee physician’s actions (either because these safeguards were not implemented or the court nevertheless found that the physician was acting on the practice’s behalf), it is important that you have in place protections to avoid suffering a negative financial impact. Accordingly, it remains important that you have a written contract with your contracted and lessee physicians which: (1) requires the physician to maintain sufficient malpractice insurance; (2) requires the physician to indemnify the practice for the physician’s actions and omissions; and (3) clearly states that the relationship between the practice and physician is one of independent contractors or lessor and lessee. By doing so, your practice will have the contractual protection to avoid significant losses.

If you are concerned about the way in which your practice advertises your contracted or lessee physicians’ services, contact our firm at (610) 296-1800. We would be happy to assist in implementing the necessary safeguards to protect your practice.

Paid Time Off: Items for Consideration

7/19/2018

One of the key benefits that all employees expect is paid time off (“PTO”). PTO can come in a number of forms. Some employers may separate PTO according to its intended use (e.g., vacation vs. sick days), whereas other employers provide employees with a single aggregate amount of PTO to be used as the employee wishes. Regardless of the breakdown of PTO, there are a number of important issues that employers must take into account when developing, implementing and enforcing PTO policies. Before delving into these issues, it is important to understand that an employer’s PTO policy may be subject to state and/or local laws which mandate the specific methods by which PTO must be provided. Currently, ten (10) states and the District of Columbia have laws that require covered employers to provide employees with sick leave. Many of these laws address issues such as carryover and payment for unused PTO as well. Accordingly, before developing any PTO policy, it is important to check your state and local laws to ensure compliance. That being said, the following issues should be considered (subject to state and local law):

Earning/Using PTO. There are two (2) general methods by which an employee can “earn” PTO. The employee may receive a “bank” of PTO at the beginning of the employment year to be used when and as needed, subject to the employer’s policies regarding requests, scheduling, etc. Alternatively, and more typically, the employee accrues PTO at a pre-established rate throughout the employment year. Under this method, the employee is generally not permitted to use the PTO until he/she has earned it. However, some employers permit employees to “borrow” from the PTO that they expect to accrue in the future. In this instance, the employer runs the risk that the employee will be terminated prior to accruing the PTO which he/she has already used. In such instance, the employer will have to seek reimbursement from the employee for the excess PTO taken. While some states may allow employers to deduct this amount from the employee’s last paycheck, other states require specific employee authorization to do so.
Unused PTO. Some employees may not use all of the PTO earned by them in a given employment year. Employers must determine, and have a written policy, on whether and the extent to which such unused PTO can be carried over by or paid out to the employee. As addressed above, state/local law may govern whether the employer is required to permit the employee to carry over PTO, and/or whether the employer is required to pay the employee for unused PTO upon termination. Assuming that state/local law does not dictate otherwise, most employers provide that unused PTO is forfeited at the end of the year. Regardless of how employers treat unused PTO, it is critical that such policies are included in a contract or employee handbook to ensure that the employees know exactly what they are entitled to receive.
Requests for Unpaid Leave. Here is where employers run into the most trouble, especially when the employer provides a “bank” of PTO at the beginning of the year. An employee uses all of his/her PTO before the end of the employment year, but continues to request time off. In these instances, the employer must decide whether to permit the employee to take the additional time as unpaid leave. In some states, employers are required to grant employees a certain amount of unpaid leave for childcare and school functions. However, a number of these states require the employee to use PTO for such purpose. Assuming state/local law does mandate specific policies, employers must implement a policy that can be uniformly enforced against all employees. While many employers want to make the occasional exception, especially for “good” employees, doing so can raise issues when the same exception is not provided to another employee (e.g., potential discrimination claim). Some policies that employers may implement to address leave taken in excess of PTO include:
1. Limiting unpaid leave to a certain amount (e.g., 5 days) and subject to prior approval of the employer. Any unpaid leave above this amount will be subject to disciplinary action, up to and including termination.
2. Implementing a tiered disciplinary system which is clearly articulated to employees. For example, an employee may receive a warning for the first unpaid absence; may be officially “written up” (i.e., note in personnel file) or placed on probation for the second unpaid absence; and may be suspended or terminated for three or more unpaid absences.
3. Implementing a discretionary bonus system where the amount of bonus paid to an employee at the end of the employment year is dependent upon specific factors, including unapproved or excess absences.

Employers have a lot to think about when implementing a PTO policy. As a takeaway, it is critical that: (1) the employer check state and local law; (2) the policy be in writing and communicated to employees; and (3) the policy be uniformly enforced against all employees. Otherwise, employers have significant discretion in determining how they wish to address PTO in their practice.

Private Equity Deals: Do Minority Shareholders Have to Go Along?

7/6/2018

Owners of private practices are divided on the matter of practice sales to private equity (“PE”) firms. Whereas more senior shareholders tend to view PE sales in a favorable light as attractive cash out opportunities, more junior shareholders tend to see such sales in an unfavorable light as reductions of future compensation and loss of control. That said, younger shareholders typically feel pressured to (or believe they are required to – although in some cases they are) go along with the majority owners and agree to the PE deal. However, minority shareholders are not necessarily required to accept PE sales.

Most states have laws that provide minority shareholders with dissenters’ rights (or appraisal rights). Generally, these laws permit minority shareholders to invoke their dissenters' rights to a proposed corporate transaction involving sale or merger. These rights, in effect, allow the shareholder to have his/her interest bought out by the practice or his/her partners at fair market value before the sale. Should a minority shareholder choose to invoke his/her dissenters' rights, he/she must follow a very specific procedure (which varies from state to state). These rights do not, however, give the minority shareholder the ability to prevent the PE deal from moving forward.

But what does this mean, practically? There are considerations that need to be made before a shareholder decides to invoke his/her dissenters' rights. First and foremost, the minority shareholder may not receive as high a payout had he/she went along with the PE deal. If the parties cannot agree to a purchase price for the shareholder’s shares, a court may be required to determine the “fair market value” of the shares. Although the court may look to an offer from a PE company as a determining factor, the court is not necessarily required to accept that the PE firm's offer is consistent with the fair market value for the shares.   Further, the minority shareholder may be required to pay the court costs and attorneys’ fees incurred by the practice to obtain this purchase price determination. So there is financial risk.

In addition, although the dissenting shareholder will avoid employment by the PE company, the shareholder, if he/she has a non-compete clause in his/her employment agreement, will almost certainly need to respect the terms of the non-compete.

So, would the dissenting shareholder be better off accepting the PE offer and then subsequently terminating his/her employment with the PE firm? Perhaps. But this may not be an option if the new employment agreement locks the shareholder’s employment for a lengthy period of time (e.g., doesn’t allow for voluntary resignation for three (3) years) or charges a penalty for premature termination.

Unfortunately, not all shareholders necessarily have the right to dissent to a PE deal or other practice sale. A shareholder may have waived these rights by agreeing to a “drag along” provision in his/her existing shareholders’ or buy-sell agreements, or another agreement among the shareholders. A drag along provision requires a shareholder to go along with a sale even if he/she votes against it (assuming the required vote is otherwise achieved).   It is possible, if not likely, that the courts would view the drag along right as a preemptive waiver of dissenters' rights – in effect, the shareholder is agreeing to the sale in advance.

Younger to middle aged shareholders have a lot to think about when their practice is considering selling to a PE company. It is important that the shareholders know their rights and whether it is worth (financially and professionally) dissenting to a PE deal proposed by the majority shareholders.

Sexual Harassment in the Workplace

6/1/2018

The current “#MeToo Movement” has brought sexual harassment to the forefront of current societal issues, and claims of sexual harassment continue to come to light in Hollywood, politics, and cities across America. As a result of this movement, sexual harassment in the workplace is being uncovered as well. Accordingly, it is critical that physician practices know: (1) what constitutes workplace sexual harassment; (2) what laws apply to sexual harassment in the workplace and what employers must do to comply with those laws; (3) what liability employers face for not appropriately addressing claims of sexual harassment; and (4) what employers can do to protect themselves financially in the event that they are held liable for workplace sexual harassment.

1. What constitutes workplace sexual harassment?

Workplace sexual harassment can take two (2) forms:

Quid Pro Quo sexual harassment occurs when employment decisions or expectations (e.g., hiring decisions, promotions, salary increases, shift or work assignments, performance expectations) are based on an employee’s submission to or rejection of unwelcome sexual conduct.
Hostile Environment sexual harassment exists when verbal or non-verbal behavior in the workplace: (1) focuses on the sexuality of another person or occurs because of the person’s gender, (2) is unwanted or unwelcome, and (3) is severe or pervasive enough to affect the person’s work environment.

2. What laws apply to sexual harassment in the workplace and what must employers do to comply with those laws?

The Equal Employment Opportunity Commission (“EEOC”) considers sexual harassment a form of sex-based discrimination prohibited under Title VII of the federal Civil Rights Act of 1964 (“Title VII”). Accordingly, any employer subject to Title VII (i.e., those having 15 or more employees), will be held responsible for preventing and responding to claims of sexual harassment. For employers with less than 15 employees, state and local anti-discrimination laws may impose restrictions and obligations similar to those imposed by Title VII. For example, Pennsylvania’s anti-discrimination law applies to employers with 4 or more employees and New Jersey’s anti-discrimination law applies to employers that have even 1 employee.

Although federal, state and local laws may slightly differ in the requirements imposed on employers, those laws generally require that employers have policies and procedures in place to prevent and respond to discrimination and harassment, including sexual harassment. The EEOC has published guidelines which employers, regardless of size, should use to draft such policies. The guidelines recommend that employers: (1) affirmatively raise the subject of sexual harassment to employees; (2) explicitly express their intolerance for such conduct; (3) develop appropriate disciplinary actions for harassers; (4) inform employees of their rights and the procedure for raising the issue with the appropriate individuals; and (5) train employees on workplace sensitivity and inappropriate behaviors.

When an employer becomes aware of potential sexual harassment, either through a complaint, anonymous report or otherwise, the employer must take the allegation seriously and promptly conduct a thorough investigation into the circumstances. The employer must take actions necessary to immediately end the harassment and restore any lost employment benefits or opportunities to the victim. The employer must also take actions to prevent any such harassment from recurring and discipline the harassing supervisor or employee consistent with the severity of the conduct.

What liability do employers face for not appropriately addressing claims of sexual harassment?

An employer’s liability for sexual harassment will depend on the position of the harasser and the employer’s knowledge of the harassment. Generally, an employer is always liable for harassment by an individual in a supervisory role when such harassment results in a negative employment action (e.g., termination, failure to promote/hire, and loss of wages). If the supervisor’s harassment results in a hostile work environment, the employer may be able to avoid liability if it can prove that: (1) it exercised reasonable care to prevent and promptly correct any harassing behavior; and (2) the employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer (e.g., the employee failed to report the behavior and the employer had no other way of uncovering such behavior).

With regard to non-supervisory employees and non-employees, the employer’s liability is less definitive. That said, the employer may be held liable for harassment by these individuals if: (1) it had control over such individuals (e.g., independent contractors or customers on the premises); (2) it knew or should have known about the harassment; and (3) it failed to take prompt and appropriate corrective action.

In the event than an employer is found liable for workplace sexual harassment, the employer’s sanctions may include, among others: (1) mandatory remedies to the aggrieved employee (e.g., job placement, promotion); (2) payment of compensatory damages for emotional harm suffered and out-of-pocket expenses incurred by the victim (e.g., back wages, job search costs); and (3) payment of punitive damages intended to punish the employer, especially when its actions were reckless and/or malicious.

What can employers do to protect themselves financially in the event that they are held liable for workplace sexual harassment?

Given the potential for liability under federal, state and/or local law, practices may consider purchasing an employer practices liability insurance (“EPLI”) policy. This policy covers employers against claims made by employees alleging discrimination (e.g., sex-based discrimination), wrongful termination, harassment and other employment-related issues (e.g., failure to promote). An EPLI policy may either be purchased as a rider on the practice’s current general liability policy or as a stand-alone policy. The cost will depend on a variety of factors including the size of the practice, history of employee claims, and whether the practice has implemented and enforces preventive rules and regulations.

If your practice needs assistance in developing and implementing sexual harassment policies or responding to sexual harassment claims that have arisen, please contact our firm.

Medicare Revalidations

5/4/2018

Over the past couple years, our firm has received a number of calls from providers (including practices and individual physicians) having trouble with their Medicare revalidations. The influx of Medicare revalidation requests is a result of the new provider screening requirements implemented pursuant to the Affordable Care Act (ACA). Prior to the ACA, providers were instructed to revalidate their Medicare enrollment records only if, and when, requested. Now, each provider has a due date (once every 5 years) on which it must revalidate its Medicare enrollment records. Although the provider should receive a notice from its Medicare Administrative Contractor (MAC) to submit such revalidation application, the obligation is on the provider to know their due date and have the revalidation application submitted by then (regardless of MAC notice).

A provider’s responsibility is not complete upon submission of the application however. It is rare that a provider’s revalidation application is completely correct on the first submission. Pursuant to Medicare regulations, providers are obligated to respond to any correspondence from their MAC to submit additional information for the revalidation. Failure to do so within the timeframe allotted (i.e., 30 days) could result in payment withholds or deactivation of the provider’s Medicare billing privileges. If a provider’s billing privileges are deactivated, he/she/it will be required to re-enroll in Medicare and all claims between deactivation and re-enrollment will be denied. Although providers have the opportunity to challenge the deactivation or appeal the re-enrollment effective date, the provider must have a legitimate claim for such challenge/appeal and even then, there are no guarantees.

It is for this reason that it is critical that providers have a reliable system in place to: (1) track its practice’s and physicians’ revalidation due dates and (2) look out for and respond to any communications from the MAC regarding revalidation, or requests for additional information. That said, things happen and the provider’s Medicare billing privileges may be deactivated for reasons beyond his/her/its control (i.e., did not receive a request for additional information). In such instances, it is critical that a challenge to the deactivation be submitted as soon as the deactivation notice is received, and the re-enrollment application be submitted as soon as possible to limit any period of non-payment of claims. It is also recommended that providers reach out to a healthcare attorney at such time to assist in challenging the deactivation and to prepare them in the event that an appeal becomes necessary.

If you or your practice has encountered a revalidation issue and would like our firm’s assistance, please contact our office at (610) 296-1800.

Illinois Non-Competes Require Adequate Consideration

4/20/2018

Following along with the trend of limiting physician non-competes, Illinois courts have taken steps to limit the instances in which non-compete provisions are enforceable. Illinois courts have historically disfavored non-compete provisions and considered them unlawful restraints on trade. That said, the courts will hold such non-compete provisions to be enforceable when ancillary to a valid contract or business relationship, deemed reasonable to protect a legitimate business interest and supported with adequate consideration. In other states applying a three-factor test such as this, the employment opportunity itself is considered adequate consideration for a non-compete provision included in an employment contract. However, Illinois appellate courts have generally held (with some exceptions) that a non-compete is not enforceable without either two (2) years of consecutive employment or some other type of consideration (i.e. raises, bonuses, promotions). Even in instances in which the employee voluntarily resigned within the two (2) year period, some Illinois courts have refused to enforce the post-employment non-compete provision. Until the Illinois Supreme Court addresses this issue, it is advisable for Illinois practices to offer additional compensation, in the form of a signing or commencement bonus, or some other form of tangible consideration, in exchange for the physician-employee’s agreement not to compete following employment.

Swoben v. UnitedHealthcare Update - Medicare Advantage Audits

6/6/2017

On May 1st the U.S. Department of Justice (DOJ) filed a False Claims Act (FCA) complaint alleging Medicare Advantage fraud against UnitedHealthcare’s parent company, UnitedHealth Group, Inc. (UHG). The complaint alleges that UHG obtained inflated risk adjustment payments based on untruthful and inaccurate information about the health status of beneficiaries enrolled in UHG’s Medicare Advantage Plan. That complaint comes shortly after the government decided in February to intervene in a whistleblower suit first brought by James Swoben in 2009 related to that same issue.

By way of background, Swoben claims that UHG’s Medicare Advantage Plans retrospectively looked at patients’ diagnostic codes with the sole purpose of finding unreported or under reported codes, but deliberately designed their chart reviews and audits to prevent the discovery of unsupported or up-charged codes. By doing so, UHG sought increased reimbursement from Medicare based on the make-up of its Medicare Advantage Plan’s patient population. Swoben alleges that those chart reviews violated the FCA based on UHG’s certification that the patient diagnostic codes accurately portrayed their patient population as determined by due diligence performed through UHG’s chart reviews. However, because UHG only focused on the positive payment adjustments and not potential negative payment adjustments, that certification was false. The DOJ, in their complaint, states that the due diligence requirement under CMS prohibits a Medicare Advantage Plan from designing a chart review procedure that does not “look both ways”. A Medicare Advantage Plan must implement compliance programs that exercise reasonable diligence to ensure the data being submitting is accurate, regardless of whether it will effect the Plan in a positive or negative way.

UHG is the nation’s largest Medicare Advantage Organization. The potential damages for this case exceed $1 billion. That would place the Swoben-UHG case among the top whistleblower-promoted cases on record. The DOJ has also combined Swoben’s lawsuit with another whistleblower suing UHG under similar pretenses.

Our firm has been monitoring this case as a result of its impact on our clients and the overly burdensome Medicare Advantage audits that they continue to encounter. Although the DOJ has made clear that chart reviews and audits are an essential part of the insurance companies’ duties under the FCA, the Medicare Advantage Plans cannot conduct audits in a manner that only ensures increased payments. Accordingly, the Swoben-UHG case may have an impact on the method in which Medicare Advantage Plans audit providers moving forward.

The Past and Current Administrations’ Impact on Physician Non-Competes

5/12/2017

Given the recent trend of states’ imposition of limitations on non-compete clauses in physician contracts, questions have arisen whether such trend was a result of an Obama Administration program which would see its conclusion with the new Trump Administration. It appears that former President Obama did take a number of steps designed to eliminate barriers to competition, such as non-compete provisions in employment contracts. Specifically, in April 2016, President Obama signed an executive order requiring governmental agencies to propose actions to increase competition. Further, in October 2016, President Obama published a State Call to Action on Non-Compete Agreements which urged states to limit the enforcement of non-competes against employees. However, both of these actions came at the heel of an already increasing trend among the states to limit non-compete provisions in employee contracts. Accordingly, although it is clear that President Obama intended to encourage this regulatory state trend, he did not initiate the trend himself.

The question remains, however, whether the Trump Administration will take action to thwart state limitations on non-compete provisions. Although President Trump did not focus on such employment issues in his campaign or initial agenda, President Trump is known for his status as a businessman and has himself used strict non-competes in his own business contracts. Further, given the pro-business makeup of President Trump’s cabinet, it is unlikely that the Trump Administration shares former President Obama’s views on non-compete provisions. That said, given President Trump’s push toward anti-regulation and the promise to repeal two regulations for every one that is passed, it is also unlikely that he will be encouraging governmental agencies to impose any regulation hindering states from limiting the use of non-compete provisions. Rather, the Trump Administration will likely take a “hands off” approach to this issue and leave the matter up to the states, thereby suggesting that the trend toward non-compete limitations may continue along its previous path.

Regardless of the current administration, state employment laws are constantly changing, whether such changes are related to non-compete provisions, wage and hour requirements, or otherwise. As state laws change, employment contracts with future employees must change as well. Accordingly, employers must be careful about using the same employment contract for former, current and future employees. Whereas certain provisions in a contract may have been permissible ten (10), five (5) or even one (1) year ago, they may now be prohibited by law. Including such unlawful provisions in employment contracts may result in the entire contract being deemed invalid. To avoid this possibility, it is critical that any new employment agreement be reviewed by an attorney with knowledge of these changing laws.

New Mexico Non-Compete Limitation

4/21/2017

In line with the recent trend of states imposing limitations on physician non-compete clauses, New Mexico’s Senate Bill 325, signed into law in April 2015, prohibits provisions in agreements which restrict the right of healthcare practitioners (including physicians, osteopathic physicians, dentists, podiatrists and certified registered nurse anesthetists) to provide clinical healthcare services (i.e. non-compete provisions). That said, the law does give medical practices some rights to protect their interests. Specifically, practice agreements may contain non-disclosure provisions relating to confidential information; non-solicitation provisions of no more than one (1) year; and impose reasonable liquidated damages provisions if the practitioner does provide clinical healthcare services of a competitive nature after termination of the agreement. In addition, healthcare practitioners employed by the practice for less than three (3) years may be required, upon termination, to pay back certain expenses to the practice, including loans; relocation expenses; signing bonuses or other incentives related to recruitment; and education/training expenses. Finally, the law does not limit non-compete provisions in agreements between shareholders, owners, partners or directors of the practice. The specific language of the law is available at: http://www.sos.state.nm.us/uploads/files/SB325-CH96-2015.pdf.

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