Lessons from the Aspen Dental Case: The Future of Non-Competes in Healthcare
The recent Aspen Dental settlement has created new questions and lessons about non-competes in the healthcare industry. The $18.7 million settlement shows how certain business tactics are coming under increased scrutiny. The Aspen Dental case does not deal directly with non-competes, however, it has a lot to teach us about their future.
The healthcare transaction attorneys at Daniels, Porco & Lusardi, LLP know that the non-compete environment continues to change, but we can help explain how it might impact your practice. Speak with us about how to proceed through this constantly evolving landscape.
What Are Healthcare Non-Compete Agreements?
Non-compete agreements restrict doctors and other professionals from working for competitors or opening their own practices. These agreements usually set a certain geographic area and time frame after leaving an employer for these restrictions. Common professionals impacted by these contracts include:
- Dentists
- Dental hygienists
- Physicians
- Medical specialists
- Nurse practitioners
- Physician assistants
- Physical therapists
- Other licensed providers
Employers like to use non-competes to protect patients as customers, private information, and the investment they put into training their staff. Critics often argue that they stifle competition and suppress wages, as well as effect patient access.
Why the Aspen Dental Settlement Matters to You
Aspen Dental Management Inc. runs hundreds of dental offices nationwide. Their corporate model is often scrutinized for its control over clinical operations. The Aspen Dental lawsuit focused on unauthorized data tracking, however, it began concerns about how large dental service organizations use legal tools like non-competes to stay on top of the market.
The case is indicative of the debate over:
- Corporate influence in healthcare
- Transparency in employment practices
- The enforceability of restrictive covenants
Although the Aspen settlement didn’t directly address non-competes, it reflects a growing intolerance for coercive business models in healthcare.
The Decline of Non-Competes Lately
There have been several changes in recent years that affect the use of non-compete agreements in the healthcare industry. These include:
- FTC Proposed Ban: In 2023, the Federal Trade Commission proposed a nationwide ban on non-compete clauses. The Commission noted that these clauses hurt workers and limit competition.
- Reforms in State Law: States such as California, Minnesota, and Colorado have enacted or expanded bans on non-compete agreements, particularly in the healthcare sector. Other states have set income thresholds or notice requirements.
- Pushback from Courts: State and federal courts are paying more attention to non-competes. They are checking for reasonableness and public interest. This concern is especially relevant when these agreements impact patient access to doctors or providers.
Implications for Healthcare Employers
The Aspen Dental case and the broader regulatory climate offer several lessons:
- Reevaluate Employment Contracts: Employers should review existing non-compete clauses for enforceability and fairness. Overly broad or punitive terms may not withstand legal scrutiny.
- Consider Alternatives: Instead of non-competes, consider:
- Non-solicitation clauses (limiting outreach to former patients)
- Confidentiality agreements
- Retention bonuses or equity incentives
- Prioritize Transparency: Clear communication about contract terms, data practices, and employee rights can build trust and reduce litigation risk.
- Monitor Regulatory Changes: Stay informed about FTC actions and state law developments that may impact enforceability.
Shifting Towards the Future
As legal and public sentiment shifts, the healthcare industry is moving toward a model that values:
- Provider Autonomy: Empowering clinicians to make career decisions without fear of litigation.
- Patient Choice: Allowing patients to follow trusted providers without artificial barriers.
- Ethical Employment Practices: Aligning contracts with professional values and public expectations.
Get Help with Healthcare Non-Compete Clauses
There are always lessons to learn, but understanding the legal complexities of the Aspen Dental case can be difficult on your own. Instead, an experienced healthcare attorney knows how to craft your corporate practices to better comply with this fast-changing set of rules around non-compete clauses.
Consult with the dedicated healthcare transaction attorneys at Daniels, Porco & Lusardi, LLP for help with your case. Contact us today for a consultation.