When a Texas medical practice breaks up, the disputes usually center on four things: whether the departing physician’s noncompete is enforceable, who keeps the patients and records, how the practice is valued, and who owes what on shared debts and leases. Texas law changed significantly in 2025, and many practice agreements have not caught up.
Is my physician noncompete still enforceable?
Texas has always treated physician noncompetes differently. Under Section 15.50 of the Business and Commerce Code, a physician noncompete must include a buyout option, and it must give the departing physician access to a list of patients seen in the prior year and to their medical records with patient authorization.
Senate Bill 1318, effective September 1, 2025, tightened those rules for noncompetes entered into or renewed on or after that date:
| Requirement | Rule after SB 1318 |
|---|---|
| Duration | No more than one year after the relationship ends |
| Geography | No more than five miles from the physician’s primary practice location |
| Buyout | Capped at the physician’s total annual salary and wages at termination |
| Writing | Terms must be clearly and conspicuously stated |
| Termination without good cause | Noncompete is void |
The law also extends similar limits to dentists, nurses and physician assistants. Contracts that auto-renew may now fall under the new rules at renewal, which can quietly make an older noncompete unenforceable.
Who keeps the patients?
Patients decide. Texas law protects a departing physician’s ability to give patients notice and continue care, and patients choose their doctor. Practices still fight over how patients are contacted, and over solicitation of staff and referral sources. Get advice before sending any announcement letters.
How is the practice valued?
Physician practices are hard to value. Much of the worth sits in the physicians themselves. Disputes often turn on accounts receivable, real estate, equipment, ancillary income such as imaging or lab services, and whether “goodwill” belongs to the practice or the individual doctor. The partnership or company agreement usually sets the method. When it doesn’t, the case usually comes down to dueling experts.
What other issues come up?
- Allocation of accounts receivable collected after a physician leaves
- Personal guarantees on leases and equipment loans
- Malpractice tail coverage: who pays for it
- Payer contracts and hospital privileges
- Regulatory constraints, such as the federal Stark law and anti-kickback rules, on how departing physicians can be paid out
How can a breakup be handled without litigation?
The best breakups follow a plan: an agreed patient-notice letter, a clear date for splitting receivables, a valuation everyone accepts, and releases on both sides. When the other side won’t cooperate, litigation may be necessary to protect your income and your patients.
From our case files
- High six-figure arbitration award. We tried and won a case for a physician against his former practice group (2018).
- Negotiated buyout. We negotiated and drafted the buyout of a physician client and his practice (2024).
- Restored hospital privileges. We sued and obtained restoration of staff privileges for a neonatal specialist against the largest hospital in the area (1998–1999).
- Before the dispute. We formed a five-neurosurgeon PLLC, drafted its company agreement, and negotiated its foundational contract with one of the largest national hospital chains (2020).
Client names are withheld for confidentiality. Every case turns on its own facts, and past results do not guarantee a similar outcome. See more representative results.
The Burk Law Firm represents physicians and medical groups in Texas practice disputes and breakups. Call (512) 306-9828.
Related: How Do You Split Up With a Business Partner in Texas? · Physician Practice Breakups · Physician Practice Disputes · Is My Noncompete Enforceable in Texas? · What Should a Physician Negotiate in a Texas Hospital Contract?
This article is general information, not legal advice. Reading it does not create an attorney-client relationship.