We wrote about the anticipated impact of the Federal Trade Commission’s expected rule on the healthcare industry. In that alert, we discussed the impacts many argued non-competes would have on the healthcare space. Specifically, while some physician groups argue the prevalence of non-competes in the healthcare industry contributes to physician shortages, other industry groups that represent rural hospitals argue they are necessary to protect the investment those small communities make in desperately needed new physicians. On April 8, 2024, the Louisiana Senate unanimously passed SB 165, a piece of legislation that seemingly takes both of these conflicting concerns into account.

SB 165 would require that non-competes in most primary care physician employment agreements expire after the physician has completed three years of service. SB 165 would also restrict the application of non-competes for primary care physicians to three contiguous parishes in which the employer carries on a “like business.” These three parishes must be specified in the physician’s written agreement. Under SB 165, a “primary care physician” is any physician who predominantly practices “general family medicine, general internal medicine, general pediatrics, general obstetrics, or general gynecology.” The bill would not apply to subspecialists in any of these medical specialties, who would remain subject to the existing law on non-competes. Further, the bill also excepts agreements for physicians employed by rural hospitals, as defined in the Rural Hospital Preservation Act. Physicians employed by these hospitals would remain subject to the existing law on non-competes, La. R.S. 23:921. By limiting restrictions on non-competes to primary care physicians and carving out rural physicians all together, the Louisiana Senate has apparently balanced the conflicting concerns various groups in the healthcare industry have voiced.

SB 165 moves to the Louisiana House of Representatives next. If the bill becomes law, healthcare providers that employ primary care physicians may need to adjust non-compete agreements included in their employment contracts. SB 165 would take effect for any contract entered into on or after January 1, 2025.