The General Assembly of the Commonwealth of Pennsylvania hereby enacts as follows:

Section 1. Short title.

This act shall be known and may be cited as the Fair Contracting for Health Care Practitioners Act.

Section 2. Legislative intent.

The General Assembly finds and declares as follows:

(1) Patient access to health care in this Commonwealth often depends on geography, transportation and availability of practitioners.

(2) Seventy-five percent of physicians are employed by hospitals, health care systems or corporate entities.

(3) Consolidated hospital systems increasingly stretch over broad geographic regions, meaning that a hospital network’s noncompete clause can prevent health care practitioners from practicing in large areas of this Commonwealth, well beyond their initial employment location.

(4) Noncompete covenants in health care inhibit competition that benefits employees and patients and can deter needed health care practitioners from wanting to practice in Pennsylvania.

(5) Providers constrained by noncompete covenants have less freedom of practice for fear of losing employment and being unable to work in their profession.

(6) Most rural areas of Pennsylvania can be considered health care deserts in which patients must travel two or three hours for their basic health care needs.

(7) Continuity of care is a fundamental public policy goal that can help patients achieve their health care goals and build trust with their health care practitioners.

(8) This Commonwealth cannot afford to continue losing health care practitioners to surrounding states and must do more to attract and retain them.

Section 3. Definitions.

The following words and phrases when used in this act shall have the meanings given to them in this section unless the context clearly indicates otherwise:

“Employer.” A person or group of persons that employ a health care practitioner at a health care facility or office.

“Health care practitioner.” the following:

(1) a medical doctor as defined in section 2 of the act of December 20, 1985 (p.l.457, no.112), known as the Medical Practice Act of 1985.

(2) a doctor of osteopathy under the act of October 5, 1978 (p.l.1109, no.261), known as the Osteopathic Medical Practice Act.

(3) a certified registered nurse anesthetist as defined in section 2(16) of the Act of May 22, 1951 (p.l.317, no.69), known as the Professional Nursing Law.

(4) a certified registered nurse practitioner as defined in section 2(12) of the Professional Nursing Law.

(5) a physician assistant as defined in section 2 of the Osteopathic Medical Practice Act or section 2 of the Medical Practice Act of 1985.

“Noncompete covenant.” An agreement that is entered into between an employer and a health care practitioner in this Commonwealth which as the effect of impeding the ability of the health care practitioner to continue treating patients or accepting new patients, either practicing independently or in the employment of a competing employer after the term of employment.

“Patient.” An individual to whom a health care practitioner rendered professional services in the health care practitioner’s scope of practice for which compensation has been received by the health care practitioner, regardless of the source of the compensation.

“Primary health care facility or office.” The office, facility or location where a majority of the revenue derived from a health care practitioner’s services is generated.

Section 4. Noncompete covenants.

(A) Applicability.–Except as provided under subsection (b), a noncompete covenant entered into after the effective date of this subsection is deemed contrary to the public policy and is void and unenforceable by an employer.

(B) Exception.–An employer may enforce a noncompete covenant if the length of the noncompete covenant is no more than one year, provided that the health care practitioner was
not dismissed by the employer.

(c) Construction.–Nothing in this section shall be construed to:

(1) prohibit the enforcement of a contract provision that allows an employer to recover reasonable expenses from a health care practitioner, if the expenses are:

(I) directly attributable to the health care practitioner and accrued within the three years prior to
separation, unless separation is caused by dismissal of the health care practitioner.

(II) related to relocation, training and establishment of a patient base.

(III) amortized over a period of up to five years from the date of separation by the health care practitioner.

(2)(I) except as provided under subparagraph (ii), void or render a noncompete covenant entered into with a health care practitioner with an interest in a business entity unenforceable as a direct result of:

(A) the sale of an ownership interest or all or substantially all of the assets of the business entity;

(B) a transaction resulting in the sale, transfer or other disposition of the control of the business entity, including by merger or consolidation. For purposes of this clause, the term “control” shall mean the possession, directly or indirectly, of the power to direct the management and policies of a business entity, whether through the ownership of voting securities, by contract or otherwise; or

(C) the health care practitioner’s receipt, by purchase, grant, award, issuance or otherwise, of an ownership interest in the business entity.

(II) A preexisting noncompete covenant may be rendered void and unenforceable under this act if a health care practitioner is not a party to the sale, transfer or other disposition under subparagraph (I).

Section 5. Notification.

(a) Patient notification.–Following the departure of a health care practitioner from an employer, the employer shall notify the health care practitioner’s patients seen within the past year of the following:

(1) the health care practitioner’s departure.

(2) if the patient chooses to receive care from the departed health care practitioner or another health care practitioner, how the patient may transfer the patient’s health records to a health care practitioner other than with the employer.

(3) that the patient may be assigned to a new health care practitioner within the existing employer if the patient chooses to continue receiving care from the employer.

(b) Time period.–The employer shall provide the notice within 90 days of the health care practitioner’s departure.

(c) Applicability.–The notification requirement shall apply to a health care practitioner with an ongoing outpatient relationship with the patient of two or more years.

Section 6. Study by Health Care Cost Containment Council.

Within three years of the effective date of this section, the Health Care Cost Containment Council, as authorized under 35 PA.C.S. § 3309 (relating to special studies and reports), shall perform a study on the effects of this act and shall report its findings to the chairperson and minority chairperson of the Health and Human Services Committee of the Senate and the Chairperson and Minority Chairperson of the Health Committee of the House of Representatives.

Section 7. Effective date.

This Act shall take effect January 1, 2025.

See Bill Information – House Bill 1633; Regular Session 2023-2024 – PA General Assembly (state.pa.us)