Generally, non-competes are enforceable if they are reasonable in scope and duration. Many situations have been carved out and the analysis can be unpredictable. The Court has also stated it disfavors non competes and that they will be strictly construed against the drafter. Non-competition clauses are still in use in most physician contracts and are a risk to both the drafter and the physician. In Arizona, the prevailing party in a contract dispute may be reimbursed for their reasonable attorneys fees raising the risk in a litigation situation.
Case law has provided two cases of note on physicians: Farber and Phoenix Orthopedic Surgeons. The Phoenix Orthopedic Surgeons case involved a restriction to the practice of medicine for three years from the date of termination within a five mile radius of the offices of Phoenix Orthopedic Surgeons. This limitation was determined to be reasonable and was enforced. The Court also found the covenant was reasonably necessary to protect the employer’s business interests. Farber involved a restriction that was three years from the date of termination with a five mile radius of any office maintained by employer (calculated as 235 square miles by the Court). This was determined to be unreasonable and was not enforced. The Court also said: the employers interest in enforcing the restriction is outweighed by the likely injury to patients and the public in general. The Court refused to state that it is not holding that restrictive covenants between physicians will never be enforced, but caution was given that such restrictions will be strictly construed.
With these two views of similar restrictions an argument can be made both ways on the issue of the reasonableness and the enforceability of covenants not to compete among physicians. It is also emphasized that decisions are very fact intensive and each situation will be unique and it is difficult to predict how the Court will rule on any given situation. As an example, if a physician was selling their practice the Court would be more likely to enforce the covenant because it was a large part of the good will being sold.