Physician noncompete agreements., the official text

First Regular Session of the 124th General Assembly (2025)

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  SENATE ENROLLED ACT No. 475

   AN ACT to amend the Indiana Code concerning professions and
occupations.

   Be it enacted by the General Assembly of the State of Indiana:

   SECTION 1. IC 25-22.5-5.5-1.1 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2025]: Sec. 1.1. As used in section 1.4 of this
chapter, "business entity" means a corporation, partnership, sole
proprietorship, professional corporation, limited liability company,
limited liability partnership, or any other company or organization
authorized to do business in Indiana.

   SECTION 2. IC 25-22.5-5.5-1.2 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2025]: Sec. 1.2. As used in sections 1.4 and
2.3 of this chapter, "hospital" has the meaning set forth in
IC 16-18-2-179(b).

   SECTION 3. IC 25-22.5-5.5-1.3 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2025]: Sec. 1.3. As used in sections 1.4 and
2.3 of this chapter, "hospital system" means:

      (1) a parent corporation of at least one (1) hospital and any
      entity affiliated with the parent corporation through
      ownership, governance, or membership; or
      (2) a hospital and any entity affiliated with the hospital
      through ownership, governance, or membership.

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   SECTION 4. IC 25-22.5-5.5-1.4 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2025]: Sec. 1.4. (a) As used in section 2.3 of
this chapter, "noncompete agreement" means a contract, or any
part of a contract, to which a physician is a party that has the
purpose or effect of restricting or penalizing a physician's ability
to engage in the practice of medicine in any geographic area, for
any period of time, after the physician's employment relationship
with a hospital, a parent company of a hospital, an affiliated
manager of a hospital, or a hospital system has ended. The term
includes any provision that does the following:

      (1) Prohibits the physician from engaging in the practice of
      medicine with a new employer.
      (2) Imposes financial penalties or repayment obligations, or
      requires reimbursement of bonuses, training expenses, or
      similar payments that:

         (A) apply to a physician that has been employed by:
            (i) a hospital;
            (ii) a parent company of a hospital;
            (iii) an affiliated manager of a hospital; or
            (iv) a hospital system;

         for at least three (3) years; and
         (B) are based solely or primarily on the physician's
         decision to continue engaging in the practice of medicine
         with a new employer.
      (3) Requires the physician to:
         (A) obtain employer consent; or
         (B) submit to equitable relief;
      to engage in the practice of medicine with a new employer,
      regardless of geographic area or specialty.
      (4) Imposes indirect restrictions that have the effect of
      limiting or deterring the physician's practice of medicine with
      a new employer.
   (b) The term does not include the following:
      (1) A nondisclosure agreement that protects confidential
      business information or trade secrets.
      (2) A nonsolicitation agreement that prohibits solicitation of
      current employees for a period not exceeding one (1) year
      after the physician's employment ends. However, the
      nonsolicitation agreement may not restrict:
         (A) patient interactions;
         (B) patient referrals;

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         (C) clinical collaboration; or
         (D) the physician's professional relationships.
      (3) An agreement made in connection with the bona fide sale
      of a business entity when the physician owns more than fifty
      percent (50%) of the business entity at the time of sale.
   SECTION 5. IC 25-22.5-5.5-1.6 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2025]: Sec. 1.6. (a) As used in section 2.3 of
this chapter, "originally entered into" refers to the date on which
an agreement is entered into for the first time.
   (b) The term does not refer to the date of:
      (1) an amendment to an existing agreement; or
      (2) renewal of an existing agreement.
   SECTION 6. IC 25-22.5-5.5-1.7 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2025]: Sec. 1.7. (a) As used in section 1.4 of
this chapter, "practice of medicine" has the meaning set forth in
IC 25-22.5-1-1.1(a)(1) and IC 25-22.5-1-1.1(a)(2).
   (b) The term does not include activities that:
      (1) are solely and exclusively executive or managerial; and
      (2) do not involve direct patient care.
   SECTION 7. IC 25-22.5-5.5-2.3 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2025]: Sec. 2.3. (a) This section does not
apply to a noncompete agreement originally entered into before
July 1, 2025.
   (b) Notwithstanding any other law, a physician and:
      (1) a hospital;
      (2) a parent company of a hospital;
      (3) an affiliated manager of a hospital; or
      (4) a hospital system;
may not enter into a noncompete agreement on or after July 1,
2025.
   (c) Any agreement in violation of this section is void and
unenforceable.

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President of the Senate

President Pro Tempore

Speaker of the House of Representatives

Governor of the State of Indiana

Date:                             Time:

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