Florida restrictive covenant agreements, whether standalone, contained in an employment agreement or as part of a medical practice purchase and sale agreement, are governed by Chapter 542, Florida Statutes. Historically, noncompete agreements have been enforceable against physicians as long as the agreements were supported by a legitimate business interest and reasonably limited in geographical scope and time. Gov. Ron DeSantis, however, recently signed into law a new section of the statute that prohibits restrictive covenant agreements, and voids existing restrictive covenant agreements, for physicians who practice a "medical specialty" in a county where all physicians in that medical specialty are employed by the same entity or its affiliates.

Effective June 25, newly enacted Florida Statutes Section 542.336 prohibits a restrictive covenant agreement between a physician who practices a medical specialty, and an entity that employs or contracts with, either directly or through an affiliated entity, all physicians who practice the specialty within the same county. The law voids any existing physician noncompete agreements that meet this criteria. The new law also provides that the restrictive covenant shall remain void and unenforceable for a three-year period following the entry of a second employer to the market that, either directly or through related or affiliated entities, employs one or more physicians who practice the same medical specialty. The statute expressly states that such restrictive covenants are void and unenforceable because the agreements are not supported by a legitimate business interest and do not benefit patients, as they restrict access to physicians and increase the cost of health care. The law was upheld by the U.S. District Court for the Northern District of Florida. See 21st Century Oncology v. Moody, No. 4:19-cv-00298-MW-CAS, 2019 WL 3948099 (N.D. Fla. Aug. 21, 2019).

The employer who challenged Section 542.336 after its enactment employed all nine of the radiation oncologists in Lee County, Florida. The court upheld the statute, which voided physician noncompete agreements contained in their employment agreements, stating that it is "well settled that access to affordable health care is a legitimate state interest" and that the "concentration and consolidation of physician services" has the potential to "both increase prices and raise problematic barriers to patients' access to treatment." The court expressly stated that the new law does not apply to family practice physicians.

Employers who, through one entity or its affiliates, employ all of the physicians practicing a medical specialty in one county, will be impacted by the enactment of this new law. As a result, companies buying or investing in a medical practice must determine whether the medical practice is the sole employer of physicians practicing that medical specialty in the county. If it is, Florida's new statute may impact the value of such purchase or investment as those physicians can no longer be subject to noncompete agreements.

Kelly-Ann Cartwright and Christine Fuqua Gay are attorneys with Holland & Knight in Miami. They represent employers on a broad range of employment and labor law matters.