A "Rare" Amendment: Colorado Amends its Non-Compete Statute for the First Time Since 1982 to Protect Physicians Treating Patients with "Rare Disorders"

In 1982, the first compact discs were introduced, the Weather Channel debuted, the first artificial heart was successfully implanted in a human patient, and Colorado first enacted its statute governing covenants not to compete, section 8-2-113, C.R.S.  Since then, to say that business and technology have changed a great deal would be a massive understatement.  But not once since 1982 has Colorado amended section 8-2-113.  Not until Governor John Hickenlooper signed Senate Bill 18-082 on April 2, 2018.

Senate Bill 18-082 amends Colorado's non-compete statute to clarify that physicians may disclose their continuing practice and provide new contact information to any of their patients who have a “rare disorder.”  Since 1982, covenants not to compete could not restrict the right of a physician to practice medicine.  But physicians could be required to pay damages “reasonably related to the injury suffered” by a breach of any such agreement.  When physicians joined together to form a practice, the practice could, in theory, include liquidated damages provisions tied to the amount the physician made in a competing practice or to the revenue lost when the physician left.  See, e.g., Wojtowicz v. Greeley Anesthesia Servs., P.C.,  961 P.2d 520, 523 (Colo. App. 1997).  Even then, however, Colorado courts had scrutinized the amounts sought.  See id. (refusing to award damages as not “reasonably related to the injury suffered”); accord Crocker v. Greater Colo. Anesthesia, P.C., No. 17CA0099, 2018 WL 1247618, at *6 (Colo. App., Mar. 8, 2018).

To aid those with rare disorders in avoiding obstacles to continued care, the Colorado General Assembly removed even the possibility of any such damages for physicians treating these patients.  Senate Bill 18-082 prohibits damages against physicians who continue to treat those with “rare disorders” recognized by the National Organization for Rare Disorders, Inc.  These “rare disorders” include approximately 1,200 disorders ranging from Aarskog Syndrome (a rare genetic condition characterized by short stature and multiple facial, limb, and genital abnormalities) to Zollinger Ellison Syndrome (a condition characterized by the development of a tumor or tumors that secrete excessive levels of a hormone that stimulates production of acid by the stomach).  The full database of rare disorders can be located at https://rarediseases.org/for-patients-and-families/information-resources/rare-disease-information/.

In short, while the change to section 8-2-113, C.R.S. may not be as monumental as the introduction of the compact disc, the fact that the Colorado General Assembly has taken a renewed interest in the statute after more than 30 years indicates that more changes could be coming.  Moreover, medical practices and individual physicians should review their non-compete, non-solicitation, and non-disclosure agreements to ensure compliance with Senate Bill 18-082, and their continued treatment of patients with rare disorders.  

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.