Armstrong & Associates Employment Law Firm

Understanding buyout provisions of physician noncompete agreements

When a physician joins a practice, he or she often must sign a noncompete clause. This prohibits the doctor from leaving the clinic and go practice somewhere within a specified mile radius.

However, Texas requires noncompete agreements to also include a buyout provision. There are some things that physicians should keep in mind.

Basics of the buyout

According to FindLaw, a buyout refers to a departing physician’s ability to pay money to the clinic or association to end the noncompete clause. If the noncompete agreement does not contain a buyout provision, there is no enforceability of the noncompete.

The doctor’s rights

When physicians choose to buy out of the noncompete agreement, they have various rights:

  • Access to the list of patients seen by the physician within the past year
  • Access to medical records and copies of medical records once a patient provides authorization
  • Ability to continue with the treatment of patients with an acute illness even after the physician departs the clinic

Additional information

The Texas code states that the buyout price must be reasonable. However, the Fort Worth Business Press discusses that there is no definition of what a reasonable price is. Some considerations include the number of patients the physician saw, the prior earnings of the physician and the costs associated with the replacement of the doctor. Because this determination can be tricky, it is smart for the departing physician to involve legal counsel.

In some cases, an agreed-upon or court arbitrator decides on the amount for the buyout. In this situation, the decision is binding, which means neither party can appeal the decision.


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