Pennsylvania is joining the growing chorus of states codifying restrictions on the use of non-competes. On July 17, 2024, Pennsylvania Governor Josh Shapiro signed into law the Fair Contracting for Health Care Practitioners Act. Effective January 1, 2025, the Act limits the use of non-competes for health care practitioners and requires employers to provide notice to patients of a health care practitioner’s departure. In passing the Act, legislators intended to improve the attraction and retention of health care practitioners in Pennsylvania and limit the negative impacts of non-competes in the healthcare industry.

With specific regard to the types of prohibited covenants, the Act renders void and unenforceable any “noncompete covenant” between an employer and health care practitioner “which has the effect of impeding the ability of the health care practitioner to continue treating patients or accepting new patients.” That definition is arguably broad enough to encompass patient nonsolicitation provisions, although such provisions are not specifically referenced.

The Act applies only to certain “health care practitioners”: medical doctors, osteopaths, nurse anesthetists, registered nurse practitioners and physician assistants.

The Act also imposes patient notification requirements on all entities falling within the definition of “employer.” Following the departure of a health care practitioner, an employer must notify the health care practitioner’s patients seen within the past year of that: (1) the health care practitioner departed; (2) the patient may receive care from the departed health care practitioner or another health care practitioner, including how the patient can transfer records to another health care practitioner other than with the employer; and (3) the patient may be assigned to another health care practitioner within the employer.

Finally, the Act does not restrict the ability of employers to enforce contractual provisions allowing an employer to recover reasonable expenses from a health care practitioner (1) directly attributable to the health care practitioner and accrued within three years prior to separation when the health care practitioner voluntarily separates from the employer; (2) related to relocations, training, and the establishment of a patient base; and (3) amortized over a period of up to five years from the date of separation by the health care practitioner.

Importantly, the Act does not restrict:

• Non-competes one year or less in duration if the health care practitioner voluntarily separates from the employer; or
• Non-competes executed prior to January 1, 2025.

With regard to the non-competes entered in the context of a sale of a business, the Act does not apply to non-competes connected to (1) the sale of a health care practitioner’s ownership interest in an entity or all or substantially all of the assets of the business entity; (2) transactions resulting in the sale, transfer, or change in control of the business entity; or (3) a health care practitioner’s receipt of an ownership interest in the business entity.