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House Co-Sponsorship Memoranda

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House of Representatives
Session of 2013 - 2014 Regular Session


Posted: May 15, 2014 09:16 AM
From: Representative Anthony M. DeLuca
To: All House members
Subject: Co-sponsorship of Legislation: Prohibiting the use of Restrictive Covenants Not to Compete by Institutions of Purely Public Charity
In the near future, I will introduce legislation to address a growing problem for doctors, nurses health care practitioners, and other employees who work for entities defined as purely public charities. Employment contracts containing restrictive covenants not to compete are clearly a growing concern. My legislation will address this issue by prohibiting the use of non-compete clauses in all employment contracts with purely public charities. Entities currently designated as purely public charities would still have the ability to enter into non-compete clauses, however they would have to forfeit their designation as a purely public charity.

The purpose of restricted covenants is to protect a private business. Purely public charities are required to operate free of any private profit motive. Therefore, there is no legitimate reason for purely public charities to use non-compete clauses in their employment agreements. Unfortunately, these types of non-compete clauses have become all too common in the health care context. As the trend of health care provider and hospital consolidations continues, physicians and other practitioners can find their employment options extremely limited. Employment contracts containing non-compete clauses are usually offered on a take it or leave it basis. This means health care practitioners, particularly young ones right out of school, have no option but to accept these contracts and their restrictive terms.

This is a particular problem in western Pennsylvania given the ongoing Highmark-UPMC dispute. While the Commonwealth was able to get UPMC to extend its contract with Highmark for one year, unless there is another contract extension Highmark cardholders will lose in-network access to their UPMC providers on January 1, 2015. Even if physicians were to leave UPMC in order to continue treating their patients on an in-network basis, many would be prohibited from treating Highmark cardholders in western Pennsylvania due to the non-compete clauses they signed with UPMC. It’s time for the legislature and the Governor to be proactive and propose a sensible solution to this very real and pressing problem.

I ask you to join me in co-sponsoring a bill that addresses a very important, non-partisan issue that could affect three million subscribers in the western Pennsylvania region alone.

Introduced as HB2326