Physician Non-Competes in Colorado
A recent Kansas case highlights the unique rules in Colorado governing non-competes for physicians.
Kansas, like many other states, allows reasonable non-competes to be enforced against physicians. In Wichita Clinic v. Louis, a physician challenged the enforcement of a non-compete and argued, among other things, that her non-compete was unreasonable and contrary to public policy. In its June 13, 2008 decision, however, the Kansas Supreme Court held that the three year, county-wide, restrictive covenant was enforceable. In addition, the court ruled that a liquidated damage provision, requiring payment of 25% of all earnings collected over three years, was not an improper penalty.
A different ruling would be entered by any Colorado court faced with these facts. In 1982, Colorado added a new subsection to its non-compete statute, C.R.S. 8-2-113, which was specifically directed to agreements which restrict the right of a physician to practice medicine. This subsection voids any such physician non-compete. There is an exception, however, that allows for the recovery of damages reasonably related to the injury suffered..
In Colorado, as a result, any trial court would decline to enforce the kind of non-compete presented in Wichita Clinic. In addition, a Colorado court would not award damages unless the conditions set forth in the statute were satisfied.
