Case tests if SD hospitals can enforce non-compete agreements for doctors

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SIOUX FALLS (AP) — A case that could determine whether South Dakota hospitals and clinics have the right to restrict where departing doctors work might soon land before the state Supreme Court.

Minnehaha County Judge Doug Hoffman ruled in late July that non-compete clauses in Sanford Health's standard physician contracts have the potential to interfere with doctor-patient relationships.

The ruling was part of a wrongful termination lawsuit. Sanford wants to separate the noncompete clause portion of the ruling so the health system can appeal it to the state Supreme Court, accourding to media reports.

Many health systems use noncompete agreements to prevent physicians from setting up their own operations and taking patients with them after they quit or get fired. In South Dakota, the agreements can legally restrict departing doctors from working within 20 miles of their previous office for two years after their employment ends.

Hoffman wrote that such a set-up has the potential to force patients who want to keep their doctor following an abrupt termination to see that doctor miles from a former office, which could create an undue burden for some patients.

Michael Myers, a University of South Dakota law professor who specializes in health care, said noncompete clauses also can lead to intimidation for doctors who raise concerns about their employer or fellow employees.

"If you do complain or you do argue ... your career, for all practical purposes, is over in that community," he said.

Sanford Health argued in court filings last week that noncompete agreements are so widely used that Hoffman's ruling "has wide-reaching ramifications for clinics, health care facilities and physicians throughout this state."

The South Dakota State Medical Association has not taken a position on the case, but its members have discussed the issue of noncompete agreements since Hoffman's ruling.

"SDSMA believes that physicians must be able to determine which patient care services are or are not provided, and opposes infringement on physicians' clinical autonomy and practices that unduly interfere with the patient-physician relationship," association President Karla Murphy said in a statement.

Tags: news, state, health, doctor, courts, non-compete, lawsuit