South-Western Legal Studies in Business

Non-Compete Agreement Not Enforceable for Physicians

Tennessee high court held that a non-competition agreement could not be enforced against physicians unless approved by statute. Enforcing such agreements would violate the public policy that favors the ability of patients to choose their physicians.

Topic Employment Law
Key Words

Non-compete Agreement; Restraint of Trade; Physicians; Enforceability

C A S E   S U M M A R Y

Dr. Udom was one of 50 physicians employed by MMC, a medical center. His contract stated that if he left MMC he would not go into medical practice with 25 miles of MMC for 18 months. He could get out of that limitation by paying MMC a yearís salary. Udomís contract was allowed to expire after two years and he was not reemployed. He told MMC he was going into practice near MMC despite the non-compete agreement. MMC sued to enjoin Udom from violating the agreement. The trial court agreed with MMC and enjoined Udom from going into practice. The appeals court held that the non-compete agreement was valid, but that Udom could not be enjoined from going into practice. Udom appealed.


Reversed. The non-compete agreement was not enforceable. If there is a legitimate business interest to be protected and the time and territorial limitations are reasonable, then non-compete agreements are enforceable. This agreement violates public policy. It prevents a physician, who has established patients, from continuing his relationship with those patients after being dismissed from MMC. Patients have the right to choose their physicians; that right is limited when such agreements are enforced. Non-compete agreements for physicians can only be enforced if approved by statute.


Murfreesboro Medical Clinic, P.A. v. Udom, 166 S.W.3d 674 (Sup. Ct., Tenn., 2005)

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