Locke Lord QuickStudy: Physician Non-Competition Agreements Again Disclaimed in Massachusetts

The recent Suffolk Superior Court holding in Velazquez M.D. vs. Eye Health Associates, LLC, highlights again the invalidity of non-competition and non-solicitation provisions in physician employment agreements in Massachusetts.  Pursuant to Massachusetts General Laws 112 ch. §12X, “any restriction of the right of [a] physician to practice medicine in any geographic area for any period of time” is prohibited.  M.G.L. ch. 112, §12X.

The Court in Velazquez explicitly held that restrictions on the form and scope of a physician’s practice, imposed by mutual and voluntary agreement, were unenforceable given the statutory bar of M.G.L. ch. 112 §12X.  Velazquez, 2014 Mass. Super. LEXIS 199, at *12.  

Plaintiff, an ophthalmologist, sued his former employer seeking a declaratory judgment and a preliminary injunction finding that the non-solicitation and non-competition restrictions imposed by his employment agreement and an asset purchase agreement he had signed voluntarily were null and void.  The language of the restrictions contained in both agreements was nearly identical.

Dr. Velazquez initially began working for Eye Health Associates in 2005.  In 2010, he became a minority owner of Eye Health Associates, which was sold to Candescent Eye Health Surgicenter, LLC, owned by Candescent Eye Holdings, LLC (Candescent) pursuant to the asset purchase agreement referenced in his complaint.  On December 14, 2012 Dr. Velazquez entered into an employment agreement with Candescent.  On March 3, 2014 Dr. Velazquez announced his intention to leave Candescent, providing Candescent with six months’ notice as required by his employment agreement.  Dr. Velazquez subsequently secured employment with Rhode Island Eye Institute.  

Candescent unsuccessfully argued that the non-competition and non-solicitation provisions imposed by the employment and asset purchase agreements would not restrict Dr. Velazquez from “providing physician services to patients as a surgeon specializing in ophthalmologic and retinal surgery with Rhode Island Eye Institute” and that the covenants were intended only to restrict Dr. Velazquez’s ability to own or manage a competing business. Velazquez, 2014 Mass. Super. LEXIS 199, at *6.  The Court noted that the Candescent did not indicate it “would not object to Dr. Velazquez assisting or soliciting patients of Candescent to become his patients at Rhode Island Eye Institute.”  Id.

The Court concluded that M.G.L. ch. 112 §12X rendered Candescent’s restrictions unenforceable and that the “public policy embodied in G.L.c. 112, §12X establishes the irreparable harm that would be suffered by Dr. Velazquez without the issuance of a preliminary injunction.”  Id. at *12-13. 

Employers of physicians should consult with counsel before signing employment and other agreements that contain restrictive covenants.  Massachusetts offers similar statutory protections prohibiting non-competition agreements for social workers, M.G.L. ch. 112 §135C, broadcasters, M.G.L. ch. 149 § 186, and nurses, M.G.L. ch. 112 § 74D.  

For more information on the matters discussed in this Locke Lord QuickStudy, please contact the authors:

Richard D. Glovsky  |  617-239-0214  |  richard.glovsky@lockelord.com