Pennsylvania Enacts Law Banning Certain Non-Compete Agreements with Healthcare Providers

Last month, Pennsylvania Gov. Josh Shapiro signed the Fair Contracting for Health Care Practitioners Act (HB 1633), which bans certain noncompete covenants, including patient nonsolicitation provisions, between an employer and health care practitioner if the covenant is more than one year or the health care practitioner was “dismissed by the employer.” The effective date of the Act is January 1, 2025, according to HCAOA Associate Member Littler.

The Act broadly defines employer as any person or group of persons that employ a health care practitioner at a health care facility or office.  The definition of health care practitioner covers medical doctors, doctors of osteopathy, certified registered nurse anesthetists, certified registered nurse practitioners, and physician assistants.  The Act uses the term “noncompete covenants,” but the definition is broad enough to cover covenants commonly known as patient nonsolicitation provisions, as these provisions may have the “effect of impeding the ability of a health care practitioner” to treat patients. 

Entities that employ health care practitioners in Pennsylvania should consult legal counsel and evaluate their post-employment restrictions, and develop plans for the patient notification process.  Employers also should monitor the Federal Trade Commission’s rule banning most noncompete agreements, which is more expansive than the Act’s prohibition on restrictive covenants and includes employee notification requirements that are scheduled to go into effect on September 4, 2024 (unless successfully challenged in the courts before the effective date).