Legislation was recently introduced in the Texas legislature that would prohibit physician covenants not to compete unless the covenant was part of an agreement that obligated the physician to perform personal services as a licensed physician. S.B. 1713, and its companion bill H.B. 3623, would preclude the enforcement of physician covenants not to compete in many ordinary transactions where protection is appropriate, such as in connection with the purchase of a retiring physician's practice.
The legislation, however, also includes helpful language that allows a court to reform a physician's covenant not to compete to comply with the non-compete statute, if the covenant does not satisfy all of the statutory requirements, except that enforcement is limited to injunctive relief for a breach of the covenant before its reformation.