H.B. No. 4504 amends the Business & Commerce Code to establish new restrictions on covenants not to compete for physicians and certain health care practitioners in Texas. The bill specifies that such covenants are enforceable only if they meet certain criteria, including not denying the physician access to their patients' lists and medical records, providing a buyout option not exceeding the physician's total annual salary at the time of termination, and allowing for continued care of specific patients during acute illnesses. Additionally, the bill introduces a new section that applies similar restrictions to health care practitioners, including dentists and nurse practitioners, ensuring that their covenants also include a buyout provision, a one-year expiration, and a geographical limitation of no more than five miles from their primary practice location.

The bill further clarifies that a covenant not to compete is void if a physician is involuntarily discharged without good cause, which is defined as a reasonable basis for discharge related to the physician's conduct or job performance. It also preempts any other laws regarding the enforceability of such covenants, establishing that the criteria and procedures outlined in this bill are exclusive. The changes will apply only to covenants entered into or renewed on or after the effective date of September 1, 2025, with prior agreements governed by the law in effect at the time they were made.

Statutes affected:
Introduced: Commerce Code 15.50, Commerce Code 15.52 (Commerce Code 15)
House Committee Report: Commerce Code 15.50, Commerce Code 15.52 (Commerce Code 15)
Engrossed: Commerce Code 15.50, Commerce Code 15.52 (Commerce Code 15)