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NONCOMPETES AND TELEMEDICINE

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February 22, 2024 by Tom Roberts, Esq.

telemedicine and noncompetes

Oops – Most non-competition agreements did not anticipate the rise of telemedicine.

noncompetition agreements in Virginia

Many noncompetition agreements simply do not address remote work, telehealth or telemedicine.  That oversight may be fatal to the agreement.

Noncompetes or non-competition clauses are restraints of trade and are not favored in the law. 

The Virginia Supreme Court explained as follows:

A non-competition agreement between an employer and an employee will be enforced if the contract is narrowly drawn to protect the employer’s legitimate business interest, is not unduly burdensome on the employee’s ability to earn a living, and is not against public policy. Because such restrictive covenants are disfavored restraints on trade, the employer bears the burden of proof and any ambiguities in the contract will be construed in favor of the employee. Each non-competition agreement must be evaluated on its own merits, balancing the provisions of the contract with the circumstances of the businesses and employees involved. …

These standards have been developed over the years to strike a balance between an employee’s right to secure gainful employment and the employer’s legitimate interest in protection from competition by a former employee based on the employee’s ability to use information or other elements associated with the employee’s former employment.  By its very name, a covenant not to compete is an agreement to prevent an employee from engaging in activities that actually or potentially compete with the employee’s former employer. Thus, covenants not to compete have been upheld only when employees are prohibited from competing directly with the former employer or through employment with a direct competitor.

Omniplex World Servs. Corp. v. US Investigations Servs., 270 Va. 246, 249 (2005)(citations omitted)

Courts look at a number of factors:

  • the function
  • geographic scope, and
  • duration elements of the restriction

These elements are considered together rather than as three separate and distinct issues. Courts determine enforceability by analyzing the scope of each agreement on a case-by-case basis.

The function element is assessed by determining whether the prohibited activity is of the same type as that engaged in by the former employer.  “Restrictive covenants that prohibit employees from working in any capacity for a competitor are overbroad” because they exceeded their reasonable scope.

Virginia’s new prohibition on non-competes for “low-wage employees”, § 40.2-28.7:8 went into effect on July 1, 2020.

Example:  What happens when a health worker is prohibited from “rendering” or “providing” medical services within a prohibited territory, but permits them to treat patients who seek out the health-worker’s care on their own without solicitation?  

Technology makes outdated models difficult to navigate

The Practice of Medicine Occurs Where the Patient is Located — or at least that’s what the Virginia Board of Medicine Claims!

The Virginia Board of Medicine recognizes that using telemedicine services in the delivery of medical services offers potential benefits in the provision of medical care. See Virginia Board of Medicine Telemedicine Guidance document 85-12, Revised June 24, 2021, Effective August 19, 2021 – 
The Virginia Board of Medicine states “The practice of medicine occurs where the patient is located at the time telemedicine services are used, and insurers may issue reimbursements based on where the practitioner is located. Therefore, a practitioner must be licensed by, or under the jurisdiction of, the regulatory board of the state where the patient is located and the state where the practitioner is located.” Id. See also Virginia Board of Medicine’s Guidance for Nurses 

Dangers:

caution

Telehealth Worker – receives a call from a person in a state where they are not licensed — (1) Are they practicing medicine, nursing, etc. in a state where they are not licensed? (2) Are they purposefully availing themselves to that foreign jurisdiction for litigation purposes? (3) Which location’s standard of care applies? (4) Can the telehealth worker mandate consent that the rendering of services is where the telehealth worker is located? etc.

Disclaimer

The materials are prepared for information purposes only.  The materials are not legal advice.  You should not act upon the information without seeking the advice of an attorney.  Nothing herein creates an attorney-client relationship.

Thomas H. Roberts & Associates, P.C.
105 S 1st Street
Richmond, Virginia 23219
(804) 783-2000
(804) 783-2105 fax


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