HBA-MPM C.S.H.B. 3285 76(R)BILL ANALYSIS


Office of House Bill AnalysisC.S.H.B. 3285
By: Van de Putte
Public Health
4/27/1999
Committee Report (Substituted)



BACKGROUND AND PURPOSE 

In today's medical practice environment, many physicians have grouped
together to form multispecialty clinics, leaving fewer solo practitioners.
When a physician leaves a group to enter his or her own practice or another
group practice, the ability of the departing physician to treat his or her
patients may be hindered due to a covenant not to compete, a contractual
clause in the physician's work contract.  This clause may make it difficult
for the patient to have his or her records transferred to the departing
physician's new office and to receive continuing care from that physician. 

C.S.H.B. 3285 provides a "buy-out" clause in a covenant not to compete, as
well as other provisions designed to allow a departing physician to provide
his or her patients with continued care.   

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 15.50, Business and Commerce Code, as follows:

Sec. 15.50.  CRITERIA FOR ENFORCEABILITY OF COVENANTS NOT TO COMPETE. (a)
Provides that a covenant not to compete under this section is subject to
any applicable provision of Subsection (b). 

(b)  Provides that a covenant not to compete is enforceable against a
person licensed as a physician by the Texas State Board of Medical
Examiners (board) if the covenant also complies with the following
requirements: 

(1)  the covenant must:
(A) not deny the physician access to a list of the physician's patients
whom the physician had seen or treated within one year of termination of
the contract or employment; 

(B) provide access to medical records of the physician's patients upon
authorization of the patient and any copies of medical records for a
reasonable fee as established by the board under Section 5.08(o), Article
4495b, V.T.C.S. (Medical Practice Act), which authorizes a physician to
charge a reasonable fee for copying medical records and provides that the
physician is not required to permit examination or copying until the fee is
paid unless there is a medical emergency; and authorizes the board, by
rule, to prescribe what constitutes reasonable fees; and 

(C) provide that any access to a list of patients or to a patient's medical
records after termination of the contract or employment shall not require
such list or records to be provided in a format different than that by
which such records are maintained except by mutual consent of the parties
to the contract; 

 (2)  the covenant must provide for a buy-out of the covenant by the
physician at a reasonable price or, at the option of either party, as
determined by a mutually agreed upon arbitrator or, in the case of an
inability to agree, an arbitrator of the court whose decision shall be
binding on the parties; and 

(3) the covenant must provide that the physician will not be prohibited
from providing continuing care and treatment to a specific patient or
patients during the course of an acute illness even after the contract or
employment has been terminated. 

SECTION 2.  Provides that this Act applies to a covenant entered into
before, on, or after the effective date of this Act. 

SECTION 3.  Effective date:  September 1, 1999.

SECTION 4.  Emergency clause.

COMPARISON OF ORIGINAL TO SUBSTITUTE

C.S.H.B. 3285 differs from the original by modifying Section 15.50 (b),
Business and Commerce Code, to modify the requirements under this
subsection as follows: 

The substitute a new Subsection (b)(1), which provides that a covenant must:

(A) not deny the physician access to a list of the physician's patients
whom the physician had seen or treated within one year of termination of
the contract or employment; 

(B) provide access to medical records of the physician's patients upon
authorization of the patient and any copies of medical records for a
reasonable fee as established by the board under Section 5.08(o), Article
4495b, V.T.C.S. (Medical Practice Act), which authorizes a physician to
charge a reasonable fee for copying medical records and provides that the
physician is not required to permit examination or copying until the fee is
paid unless there is a medical emergency; and authorizes the board, by
rule, to prescribe what constitutes reasonable fees; and 

(C) provide that any access to a list of patients or to a patient's medical
records after termination of the contract or employment shall not require
such list or records to be provided in a format different than that by
which such records are maintained except by mutual consent of the parties
to the contract. 

The original bill required that the covenant must provide for unrestricted
access to and copies of medical records of patients under the care of a
physician after termination of a contract or employment. 

The substitute modifies proposed Subsection (b)(2) to provide for a buy-out
of the covenant by the physician at a reasonable price or, at the option of
either party, as determined by a mutually agreed upon arbitrator or, in the
case of an inability to agree, an arbitrator of the court whose decision
shall be binding on the parties.  The original bill provided that a
covenant must provide for a buy-out provision by the physician at a
reasonable price as determined by a mutually agreed upon arbitrator. 

The substitute deletes proposed Subsection (b)(3) of the original and
redesignates Subsection (b)(4) of the original to Subsection (b)(3) of the
substitute.  Subsection (b)(3) of the substitute provides that the covenant
must provide that the physician will not be prohibited from providing,
rather than will be able to provide, continuing care and treatment to a
specific patient or patients during the course of, rather than with, an
acute illness even after the contract or employment has been terminated.