By: Lucero Tennis Kieffer and Chad J. Sullivan
Indiana is one step closer to a landmark change in healthcare employment. On January 28, 2025, the Indiana Senate passed Indiana Senate Bill 475 (“SB 475”), which, if signed into law, would outright ban employers from entering into physician non-competes with any physician after June 30, 2025. While it may seem like SB 475 is a sudden change, it is a natural continuation of the state’s legislative trend that started with Indiana House Enrolled Act 1004 (HEA 1004), which went into effect in 2020, and continued with Indiana Senate Enrolled Act 7 (SEA 7), which went into effect in 2023.
Current Indiana Law
Under current Indiana law, a primary care physician[1] and employer cannot enter into a non-compete agreement after June 30, 2023. Also, a physician non-compete may be rendered unenforceable if one of the following events occur: (1) the employer terminates the physician without cause, (2) the physician terminates for cause, or (3) the employment contract has expired and the physician and employer have “fulfilled the obligations of the contract.” Indiana also requires certain provisions to be contained in a physician non-compete to be enforceable. For example, a physician non-compete must grant a departing physician the option to purchase a complete and final release from the terms of the non-compete (i.e., a buy-out clause).
SB 475: Moving Toward an Outright Ban
SB 475 takes things a step further by fully prohibiting non-competes for all physicians, not just primary care physicians. It is important to note, however, that SB 475 does not have a retroactive effect and only applies prospectively (i.e., it does not apply to physician non-competes originally entered into before July 1, 2025).
As the bill heads to the Indiana House of Representatives, it’s clear that the trend is shifting toward a more open, competitive healthcare market for medical professionals. If SB 475 passes, Indiana will join a growing number of states looking to limit or outright ban non-compete clauses in healthcare.
[1] A “primary care physician” refers to a physician practicing in one (1) or more of the following: family medicine, general pediatric medicine, and internal medicine.