Lisa Stewart Albright

Governor Josh Shapiro has signed the “Fair Contracting for Health Care Practitioner’s Act” (“the Act”), Pennsylvania’s first statute imposing limitations on the use of non-competes in the Commonwealth. Pennsylvania joins the growing list of a dozen states which have enacted legislative bans or limitations on healthcare provider non-competition agreements in recent years.The Act, which becomes effective January 1, 2025, represents the legislature’s response to the current trend of health system consolidation and direct health care practitioner employment, and is a seismic shift in the enforcement of non-compete covenants entered into between Pennsylvania employers and healthcare practitioners. Subject to certain exceptions, a “noncompete covenant” entered into after January 1, 2025 is “deemed contrary to the public policy and is void and unenforceable by an employer.” A “noncompete covenant” is defined as an “agreement that is entered into between an employer and a healthcare practitioner in this Commonwealth which has the effect of impeding the ability of the healthcare 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.” A “healthcare practitioner” is defined under statute and includes a medical doctor, a doctor of osteopathy, a certified registered nurse anesthetist and certified nurse practitioner, and a physician’s assistant.The Act does provide several specific exceptions. First, an employer may enforce a noncompete covenant if the length of the noncompete covenant is no more than one year, provided that the healthcare practitioner was not dismissed by the employer. Second, a noncompete covenant can be enforced as to a healthcare practitioner in ”(a) the sale of the healthcare practitioner’s ownership interest in, 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; or (c) the healthcare practitioner’s receipt of an ownership interest in the business entity. However, a preexisting noncompete covenant may be rendered void and unenforceable if a healthcare practitioner is not a party to the sale, transfer or other disposition. Third, an employer may enforce contractual provisions that allow the employer to recover reasonable expenses from a healthcare practitioner, if the expenses are: (a) directly attributable to the healthcare practitioner and accrued within the three years prior to separation, unless separation is caused by dismissal of the healthcare practitioner; (b) related to relocation, training and establishment of a patient base; or (c) amortized over a period of up to five years from the date of separation by the healthcare practitioner.To ensure continuity of care between patients and providers, the Act requires employers to notify patients of a departing healthcare practitioner within 90 days following the departure of a healthcare practitioner from an employer. The employer must notify the healthcare practitioner’s patients seen within the past year of (a) the healthcare practitioner’s departure; (b) how the patient, if desired, may transfer the patient’s health records to the departed healthcare practitioner; and (c) that the patient, if desired, may be assigned to a new healthcare practitioner within the existing employer, to continue receiving care there.Archer's Labor & Employment Group will continue to monitor the impact of the Act when it takes effect in 2025 and thereafter, as the Act specifically mandates that by December 31, 2027, the Pennsylvania Health Care Cost Containment Council perform a study on the effects of the Act, and report its findings. For any questions, please reach out to Peter Frattarelli, Chair of the Labor & Employment Group, at 856.354.3012 or pfrattarelli@archerlaw.com, Thomas Muccifori, Chair of the Trade Secret Protection & Restrictive Covenants Group, at 856.354.3056 or tmuccifori@archerlaw.com, or Lisa Albright, Partner in the Healthcare Group, at 609.580.3710 or lalbright@archerlaw.com.DISCLAIMER: This client advisory is for general information purposes only. It does not constitute legal or tax advice, and may not be used and relied upon as a substitute for legal or tax advice regarding a specific issue or problem. Advice should be obtained from a qualified attorney or tax practitioner licensed to practice in the jurisdiction where that advice is sought. ...

Healthcare facilities are urged to remember to perform regular checks of both state and federal lists of excluded individuals and entities – i.e. persons or organizations who are prohibited from participating in federal and state health care programs – to ensure that their employees, independent contractors and vendors are not on such lists. As a general rule, federal health care programs such as Medicare will not pay for items or services which are furnished, ordered, prescribed, or supplied, whether directly or indirectly, by an individual or entity (i.e. a “Person”) who has been excluded from participation in that federal health care program. If a healthcare entity employs or engages an excluded Person and then bills a federal health care program for any items or services the excluded Person directly or indirectly furnished, ordered, or prescribed, it may also be subject to Civil Monetary Penalties (“CMP”) liability under the False Claims Act (“FCA”). It is important to note that the prohibition on services is broadly defined so as to include not only direct care, but also indirect services such as filling prescriptions, providing transportation services, and performing administrative and management services that are not separately billable. While OIG guidance does permit entities to employ/engage an excluded Person who does not provide any items or services paid for, directly or indirectly, by federal health care programs, doing so requires significant caution and a strict curtailing of their roles and responsibilities to ensure protection from future liabilities. While the regulations concerning exclusions have existed for almost fifty years, it is clear that they remain an important area of enforcement. Since 2023, the federal Office of Inspector General has issued over $2.5 million in CMPs to healthcare entities who have employed an excluded individual.In addition to the federal requirements surrounding excluded individuals, many states have not only adopted versions of the federal exclusion requirements, but have created their own exclusion criteria and penalties associated with employing an excluded individual. For this reason, participating providers should consult not only the federal guidance on exclusion checks, but also their state requirements. Best Practices to Ensure Compliance The responsibility of remaining compliant with state and federal exclusion provisions falls to the billing healthcare provider/ facility. The easiest method to ensure compliance is to maintain a robust compliance program within the entity through the development of policies and procedures that mandate routine checks of all employees and vendors against state and federal exclusion lists. Entities should also maintain records of these completed checks. Because the applicable lists are generally updated every thirty (30) days, it is recommended that entities perform checks upon engagement or employment, as well as every thirty (30) days thereafter. For healthcare providers in New Jersey, we recommend a monthly review of the following databases:...

Most recently, as per its website, the NJ DOH will revoke seven health facility waivers as of August 13, 2023. They are:...