Business Counsel Services Firm News

The Dilution of Texas Corporate Practice of Medicine

Until recently, Texas had one of the strongest corporate practices of medicine in the United States.  Basically, the corporate practice of medicine required that any entity providing clinical medical services in Texas had to be a professional entity wholly owned by a physician.  In addition, only a physician could be an officer or manager of that professional entity.  There are several states that have corporate practice of medicine statutes but most states are more diluted to the extent the statutes allow non-physicians to own a medical practice. 

On June 17, 2011, the Governor of Texas signed House Bill 2098, which immediately amended the Code of the Texas Business Organization Code and the Texas Occupation Code to authorize joint ownership of professional entities by physicians and physician assistants.  This is a significant change from the past limitations of the corporate practice of medicine in Texas.
Although this law does allow the physicians and physician assistants to partner together, these joint ownerships still have certain criteria that they must meet to be legal under the new corporate practice of medicine law.  These criteria include the necessity to have significant language as it relates to the governance and ownership of the professional entity.   For example, the physician assistant cannot contract or employ a physician to be the supervising physician of that physician assistant.  In addition, the physician assistant may have only a minority ownership interest in that entity and the physician assistant may not have any ownership that is equal to or exceeding that of any other individual physician owner.  Furthermore, the statute limits the control that the physician assistant may have in governing the entity.  Finally, physician assistants with these types of ownership will have annual reporting requirements with the physician assistant board.    

This law is the first considerable step into allowing non-physicians to own professional entities with physicians.  As previously noted, the law applies only to physician assistants and not to other medical professionals or non-medical professionals.  Nevertheless, there are new creative ownership models for physician practices.  Because of the regulatory constraints involved with physician assistants owning a part of a medical practice, it is imperative that the entity and governing documents be carefully developed.

By:  Bradford E. Adatto and Michael S. Byrd

Firm News

Groundbreaking Decision on Non-Compete Agreements

Non-compete agreements traditionally have been disfavored but, under certain circumstances, have been enforceable in Texas.  In follow up to rulings in recent years that lighten the burden for employers to enforce non-competes, the Texas Supreme Court has reached another important decision that strengthens the ability of employers to enforce non-competes. In Marsh USA Inc. et al. v. Cook, Case No. 09-0558 (Tex. June 24, 2011), the Court held that a non-compete covenant contained in a stock option plan was enforceable. The Court reasoned that stock options are sufficient consideration for a non-compete because they give rise to the employer’s interest in protecting the "goodwill" of its business. 

 This holding is a significant departure from past holdings where courts for many years viewed that providing financial consideration was not sufficient for a non-compete agreement. Only the provision of confidential information, trade secrets, special training, and/or other proprietary information supporting a company’s goodwill was sufficient consideration. In Marsh, the Court established a new test that will pave the way to additional avenues for employers to take in seeking to protect the goodwill of their businesses.

by Jim Stanford and Michael S. Byrd

Commercial Litigation Firm News

SettlePou Associate Takes Leave for Federal Judicial Clerkship

Kristina Kiik, a member of SettlePou’s Commercial Litigation Section, is on leave until September 2012.  She is serving as a judicial law clerk for the Honorable W. Royal Furgeson, Jr., Senior District Judge, U.S. District Court for the Northern District of Texas, Dallas division.

Kristina attended Southern Methodist University for both her undergraduate and legal education. She received a B.A. in Political Science, International Studies, and Public Policy in 2006, and was a 2010 cum laude law school graduate.  She was also the Casenote and Comment Editor for the SMU Law Review and a member of the Phi Delta Phi legal fraternity.

While federal law clerks have no statutorily defined duties, they regularly conduct legal research, prepare bench memoranda, draft orders and opinions, and confer with the judge on rulings.

Kristina looks forward to returning to SettlePou upon the completion of her clerkship.