(a)

Terms Used In Tennessee Code 63-6-204

  • Appraisal: A determination of property value.
  • Code: includes the Tennessee Code and all amendments and revisions to the code and all additions and supplements to the code. See Tennessee Code 1-3-105
  • Common law: The legal system that originated in England and is now in use in the United States. It is based on judicial decisions rather than legislative action.
  • Contract: A legal written agreement that becomes binding when signed.
  • Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
  • Dependent: A person dependent for support upon another.
  • Fair market value: The price at which an asset would change hands in a transaction between a willing, informed buyer and a willing, informed seller.
  • Person: includes a corporation, firm, company or association. See Tennessee Code 1-3-105
  • Property: includes both personal and real property. See Tennessee Code 1-3-105
  • State: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Tennessee Code 1-3-105
  • Statute: A law passed by a legislature.
  • United States: includes the District of Columbia and the several territories of the United States. See Tennessee Code 1-3-105
  • written: includes printing, typewriting, engraving, lithography, and any other mode of representing words and letters. See Tennessee Code 1-3-105
  • Year: means a calendar year, unless otherwise expressed. See Tennessee Code 1-3-105
(1) Any person shall be regarded as practicing medicine within the meaning of this chapter who treats, or professes to diagnose, treat, operates on or prescribes for any physical ailment or any physical injury to or deformity of another.
(2) Nothing in this section shall be construed to apply to the administration of domestic or family remedies in cases of emergency or to the laws regulating the practice of dentistry.
(3) This chapter shall not apply to surgeons of the United States army, navy, air force, or marine hospital service regardless of the hospital or practice site; provided, that the surgeon’s practice is part of the surgeon’s authorized military service or training. This chapter shall also not apply to any registered physician or surgeon of other states when called in consultation by a registered physician of this state, or to midwives, veterinary surgeons, osteopathic physicians, or chiropractors not giving or using medicine in their practice, or to opticians, optometrists, chiropodists, or Christian Scientists.
(b) Nothing in this chapter shall be so construed as to prohibit service rendered by a physician assistant, registered nurse, a licensed practical nurse, or a pharmacist pursuant to a collaborative pharmacy practice agreement, if such service is rendered under the supervision, control and responsibility of a licensed physician or to prohibit the provision of anesthesiology services in licensed health care facilities by a dentist licensed in this state who completed a residency program in anesthesiology at an accredited medical school in years 1963 through 1977.
(c) Nothing in this section shall be construed to prohibit a person, corporation, organization or other entity from employing a physician to treat only the entity’s full-time, part-time and contract employees, the entity’s retirees and dependents of the entity’s employees or retirees; provided, however, that the employment relationship between the physician and the person, corporation, organization or other entity is evidenced by a written contract, job description or documentation, containing language which does not restrict the physician from exercising independent medical judgment in diagnosing and treating patients. Under this section, such person, corporation, organization or other entity shall not be deemed to be engaged in the practice of medicine.
(d) Nothing in this section shall be construed to prohibit a community mental health center as defined in § 33-1-101 from employing a physician; provided, that the employment relationship between the physician and the community mental health center is evidenced by a written contract, job description or documentation, containing language which does not restrict the physician from exercising independent medical judgment in diagnosing and treating patients; provided, for the purposes of this subsection (d), “physician” does not include an anesthesiologist, an emergency department physician, a pathologist or a radiologist.
(e)

(1) Nothing in this section prohibits a federally-qualified health center or rural health clinic from employing a physician if the employment relationship between the physician and the federally-qualified health center or rural health clinic is evidenced by a written contract, job description, or documentation containing language that does not restrict the physician from exercising independent medical judgment in diagnosing and treating patients.
(2) As used in this subsection (e):

(A) “Federally-qualified health center” has the same meaning as defined under §§ 1861(aa) and 1905 of the federal Social Security Act (42 U.S.C. §§ 1395x and 1396d, respectively);
(B) “Physician” does not include an anesthesiologist, an emergency department physician, a pathologist, or a radiologist; and
(C) “Rural health clinic” has the same meaning as defined under §§ 1861(aa) and 1905 of the federal Social Security Act (42 U.S.C. §§ 1395x and 1396d, respectively).
(f)

(1) Notwithstanding this section, nothing shall prohibit a hospital licensed under title 68, chapter 11, or title 33, chapter 2, or an affiliate of a hospital, from employing licensed physicians other than radiologists, anesthesiologists, pathologists, or emergency physicians, to provide medical services, subject to the following conditions:

(A) Employing entities shall not restrict or interfere with medically appropriate diagnostic or treatment decisions;
(B) Employing entities shall not restrict or interfere with physician referral decisions unless:

(i) The physician so employed has agreed in writing to the specific restrictions at the time that the contract is executed;
(ii) The restriction does not, in the reasonable medical judgment of the physician, adversely affect the health or welfare of the patient; and
(iii) The employing entity discloses any such restrictions to the patient; and
(C) In the event that there is any dispute relating to subdivision (f)(1)(A) or (B), the employing entity shall have the burden of proof.
(2) Employing entities shall not restrict the employed physician’s right to practice medicine upon the termination or conclusion of the employment relationship, except as follows:

(A) For physicians from whom the employing entity has made a bona fide purchase of the physician’s practice, the employing entity may impose reasonable geographic restrictions upon the employed physician’s practice; provided, that:

(i) The maximum allowable area of the restriction is the greater of:

(a) The county in which the primary practice site is located; or
(b) A ten (10) mile radius from the primary practice site;
(ii) The duration of the restriction is two (2) years or less, unless a longer period, not to exceed five (5) years, is determined by mutual agreement of the parties in writing to be necessary to comply with federal statutes, rules, regulations, or IRS revenue rulings or private letter rulings;
(iii) Any employment agreement or medical practice sale agreement restricting the right of a physician to practice shall:

(a) Allow the physician to buy back the physician’s medical practice for the original purchase price of the practice, or, in the alternative, if the parties agree in writing, at a price not to exceed the fair market value of the practice at the time of the buy back, at which time any such restriction on practice shall be void; and
(b) Not require that the physician give more than thirty-day’s notice to exercise the repurchase option; provided, that this provision shall not otherwise affect the contract termination notice requirements; and
(iv) If the buy back provision is dependent upon a determination of the fair market value of the practice, the contract shall specify the method of determining fair market value by independent appraisal, in the event that the parties cannot agree as to the fair market value. The contract shall also include the following language:

“In the event that the employing entity and the physician cannot agree upon the fair market value of the practice within ten (10) business days of the physician’s notice of intent to repurchase the practice, the physician may remove any contractual restrictions upon the physician’s practice by tendering to the employing entity the amount that was paid to the physician for the practice. The employing entity or the physician may then seek a determination of the fair market value of the practice by the independent appraisal method specified by contract.”

(B) For physicians employed independently of a bona fide practice purchase, employing entities shall not restrict the employed physician’s right to practice medicine upon the termination or conclusion of the employment relationship, except as allowed by § 63-1-148 or any successor section.
(3) Notwithstanding the foregoing, in the event that the employment contract with a physician employed independently of a bona fide practice purchase is terminated by the employing entity for reasons other than breach by the employee, any such restrictions shall be void.
(4) In any event, nothing in this section shall prohibit any of the following from employing physicians:

(A) A licensed physician; or
(B) A group of licensed physicians, including, but not limited to, either of the following:

(i) A physicians’ professional corporation registered under title 48, chapter 101; or
(ii) A domestic nonprofit public benefit corporation:

(a) That is recognized as exempt under § 501(c)(3) of the Internal Revenue Code (26 U.S.C. § 501(c)(3)), or any successor section;
(b) A purpose of which is to engage in medical education and medical research in conjunction with a college or university operating an accredited medical school in Tennessee;
(c) Whose physician-employees are restricted to the medical faculty of such a college or university; and
(d) Which operates as a “faculty practice plan” for purposes of Title XVIII of the federal Social Security Act (42 U.S.C., Chapter 7, subchapter XVIII), and regulations promulgated in connection therewith;

Provided, that with respect to any such domestic nonprofit public benefit corporation, physician employees of any such faculty practice plan who practice in the specialties of radiology, pathology, anesthesiology and/or emergency medicine shall be restricted to practice as faculty practice plan employees in those health care institutions, including but not limited to hospitals or surgery centers, in which they were practicing as employees of the nonprofit public benefit corporation on May 30, 1997.

(5) A hospital affiliate that employs physicians shall not engage in any business other than the employment of physicians, the management of physicians and health care facilities, or the ownership of property and facilities used in the provision of health care services. An affiliate of a hospital that employs physicians pursuant to this part shall be subject to the authority of the applicable licensing board under either title 68, chapter 11, or title 33, chapter 2 in connection with employment of physicians. Any violation of this statute by an affiliate shall subject any hospital at which the physician has staff privileges, and that controls or is under common control with the affiliate to the penalties and sanctions applied to hospitals that employ physicians.
(6)

(A) No radiologist, anesthesiologist, pathologist, or emergency physician may be employed by a hospital or an affiliate of a hospital, and no hospital or an affiliate of a hospital, may employ any physician to provide medical services provided by radiologists, anesthesiologists, pathologists, or emergency physicians; provided, that a physician may be employed to provide emergency medical services if such physician is employed to provide other medical services.
(B) Notwithstanding subdivisions (f)(6)(A) and (f)(1), a “research hospital,” as defined in this section, may employ radiologists, anesthesiologists, or pathologists under the same terms and conditions as other physicians.
(7) As used in this section, unless the context otherwise requires:

(A) “Affiliate” of a hospital means an entity that directly or indirectly is controlled by, or is under common control with, a hospital licensed under title 68, chapter 11 or title 33, chapter 2. “Affiliate” does not mean, however, a health maintenance organization licensed under title 56, chapter 32;
(B) “Anesthesiologist” is a physician who has completed a residency in anesthesiology and whose practice is primarily limited to anesthesiology, including, without limitation, nerve block, pain management, cardiac and respiratory resuscitation, respiratory therapy, management of fluids, electrolyte and metabolic disturbances, or a dentist licensed in the state who completed a residency program in anesthesiology at an accredited medical school in years 1963 through 1977;
(C) “Emergency physician” is a physician who has either completed a residency in emergency medicine, or practiced emergency medicine full time for a three year period, and whose practice is limited to emergency medicine. “Emergency physician” does not include, however, a physician who has been previously employed to provide nonemergent medical services who, over a period of twelve (12) months or more, becomes a full time emergency physician and who remains employed by mutual agreement;
(D) “Employing entity” means a hospital licensed under title 68, chapter 11, or title 33, chapter 2, or an affiliate of such an entity, that employs one (1) or more physicians. “Employing entity” does not mean, however, a health maintenance organization licensed under title 56, chapter 32;
(E) “Pathologist” is a physician who has completed a residency in pathology and whose practice is primarily limited to pathology, including, without limitation, anatomic and clinical pathology;
(F) “Physician” means a person licensed pursuant to chapter 6 or 9 of this title;
(G) “Psychiatrist” means a physician who has completed a residency in psychiatry and whose practice is primarily limited to psychiatry.
(H) “Radiologist” is a physician who has completed a residency in radiology and whose practice is primarily limited to radiology, including, without limitation, diagnostic radiology, radiation therapy, and radiation oncology; and
(I) “Research hospital” means a hospital at which fifty percent (50%) or more of the inpatients treated during the previous calendar year were treated pursuant to research protocols.
(g)

(1) Notwithstanding this section, nothing shall prohibit a renal dialysis clinic licensed under title 68, chapter 11 or an affiliate of a renal dialysis clinic from employing licensed physicians other than radiologists, anesthesiologists, pathologists or emergency physicians to provide medical services, subject to the following conditions:

(A) Employing entities shall not restrict or interfere with medically appropriate diagnostic or treatment decisions;
(B) Employing entities shall not restrict or interfere with physician referral decisions unless:

(i) The physician so employed has agreed in writing to the specific restrictions at the time that the contract is executed;
(ii) The restriction does not, in the reasonable medical judgment of the physician, adversely affect the health or welfare of the patient; and
(iii) The employing entity discloses the restrictions to the patient; and
(C) In the event that there is any dispute relating to subdivision (g)(1)(A) or (g)(1)(B), the employing entity shall have the burden of proof.
(2) Employing entities shall not restrict the employed physician’s right to practice medicine upon the termination or conclusion of the employment relationship, except as allowed by § 63-1-148 or any successor section.
(3) Notwithstanding § 63-1-148 or any successor section, in the event that the employment contract with a physician employed independently of a bona fide practice purchase is terminated by the employing entity for reasons other than breach by the employee, the restrictions shall be void.
(4) In any event, nothing in this section shall prohibit any of the following from employing physicians:

(A) A licensed physician; or
(B) A group of licensed physicians, including, but not limited to, either of the following:

(i) A physicians’ professional corporation registered under title 48, chapter 101; or
(ii)

(a) A domestic nonprofit public benefit corporation:

(1) That is recognized as exempt under § 501(c)(3) of the Internal Revenue Code (26 U.S.C. § 501(c)(3)) or any successor section;
(2) A purpose of which is to engage in medical education and medical research in conjunction with a college or university operating an accredited medical school in Tennessee;
(3) Whose physician-employees are restricted to the medical faculty of such a college or university; and
(4) That operates as a faculty practice plan for purposes of Title XVIII of the federal Social Security Act (42 U.S.C. chapter 7, subchapter XVIII) and regulations promulgated in connection therewith.
(b) Provided, that, with respect to the domestic nonprofit public benefit corporation, physician employees of the faculty practice plan who practice in the specialties of radiology, pathology, anesthesiology or emergency medicine shall be restricted to practice as faculty practice plan employees in those health care institutions, including, but not limited to, hospitals or surgery centers, in which they were practicing as employees of the nonprofit public benefit corporation on May 30, 1997.
(5) An affiliate of a renal dialysis clinic that employs physicians shall not engage in any business other than the employment of physicians, the management of physicians and health care facilities or the ownership of property and facilities used in the provision of health care services or a tissue bank or organ procurement agency. An affiliate of a renal dialysis clinic that employs physicians pursuant to this part shall be subject to the authority of the applicable licensing board under title 68, chapter 11, in connection with employment of physicians. Any violation of this subdivision (g)(5) by an affiliate shall subject any renal dialysis clinic at which the physician has staff privileges and that controls or is under common control with the affiliate to the penalties and sanctions applied to renal dialysis clinics that employ physicians.
(6) No radiologist, anesthesiologist, pathologist or emergency physician may be employed by a renal dialysis clinic or an affiliate of a renal dialysis clinic, and no renal dialysis clinic or an affiliate of a renal dialysis clinic may employ any physician to provide medical services provided by radiologists, anesthesiologists, pathologists or emergency physicians; provided, that a physician may be employed to provide emergency medical services if the physician is employed to provide other medical services.
(7) As used in this section, unless the context otherwise requires:

(A) “Affiliate” of a renal dialysis clinic means an entity that directly or indirectly is controlled by or is under common control with a renal dialysis clinic licensed under title 68, chapter 11. “Affiliate” does not mean, however, a health maintenance organization licensed under title 56, chapter 32;
(B) “Anesthesiologist” is a physician who has completed a residency in anesthesiology and whose practice is primarily limited to anesthesiology, including, without limitation, nerve block, pain management, cardiac and respiratory resuscitation, respiratory therapy, management of fluids, electrolyte and metabolic disturbances or a dentist licensed in this state who completed a residency program in anesthesiology at an accredited medical school in years 1963 through 1977;
(C) “Emergency physician” is a physician who has either completed a residency in emergency medicine or practiced emergency medicine full-time for a three year period and whose practice is limited to emergency medicine. “Emergency physician” does not include, however, a physician who has been previously employed to provide nonemergent medical services who, over a period of twelve (12) months or more, becomes a full-time emergency physician and who remains employed by mutual agreement;
(D) “Employing entity” means a renal dialysis clinic licensed under title 68, chapter 11 or an affiliate of such an entity that employs one (1) or more physicians. “Employing entity” does not mean, however, a health maintenance organization licensed under title 56, chapter 32;
(E) “Pathologist” is a physician who has completed a residency in pathology and whose practice is primarily limited to pathology, including, without limitation, anatomic and clinical pathology;
(F) “Physician” means a person licensed pursuant to chapter 6 or 9 of this title; and
(G) “Radiologist” is a physician who has completed a residency in radiology and whose practice is primarily limited to radiology, including, without limitation, diagnostic radiology, radiation therapy and radiation oncology.
(h)

(1) The general assembly finds that there are special facts above and beyond ordinary competition that would give an unfair advantage to a physician when competing with the physician’s former employer, if the former employer is a faculty practice plan. The existence of such special facts warrants protection of the faculty practice plan through restrictive covenants and prohibitions against an employed physician’s right to practice medicine upon the termination or conclusion of the employment relationship. The general assembly further finds that the faculty practice plan’s right to be free of unfair competition from a former employed physician outweighs any financial hardship to the former employed physician resulting from the operation of any such restrictive covenants or prohibition. The general assembly further finds that restrictive covenants and prohibitions against an employed physician’s right to practice medicine upon the termination or conclusion of the employment relationship with a faculty practice plan are reasonable and not inimical to the public interest, subject to the temporal and geographic limitations set forth in subdivision (h)(2).
(2) A faculty practice plan may impose restrictions or prohibitions upon an employed physician’s right to practice medicine upon the termination or conclusion of the employment relationship provided that:

(A) The maximum area of the restrictions or prohibitions is the greater of:

(i) The county in which the primary practice site is located; or
(ii) A ten (10) mile radius from the primary practice site; and
(B) The maximum duration of the restrictions or prohibitions is two (2) years.
(3) As used in this subsection (h), “faculty practice plan” means a domestic nonprofit public benefit corporation as defined in subdivision (f)(4)(B)(ii).
(4) As used in this subsection (h), “primary practice site” includes any health care institution, including, but not limited to, a hospital, clinic, surgery center, or physicians’ office, that the faculty practice plan or its affiliated college or university owned, leased, or operated within two (2) years before the termination or conclusion of the employment relationship between the physician and the faculty practice plan and at which the employed physician practiced medicine within such period of two (2) years.
(5) This subsection (h) shall not apply:

(A) To any physician employee of a faculty practice plan who practices in the specialties of ophthalmology, pathology, anesthesiology and/or emergency medicine; or
(B) With respect to any physician employee of a faculty practice plan who practices as a primary care physician or in the specialties of obstetrics or general pediatrics in a health resources shortage area as determined in the health access plan most recently published by the department of health.
(6) The requirements of this subsection (h) shall not be construed to preclude the enforceability of any restrictive covenant or prohibition exceeding the requirements or conditions of this subsection (h) that is reasonable and not inimical to the public interest under the common law principles governing restrictive covenants.
(i) Notwithstanding the restrictions contained in this section, a nursing home or affiliate of a nursing home may employ a physician pursuant to § 68-11-205.
(j)

(1) Nothing in this section shall be construed to prohibit a charitable clinic from employing or contracting with a physician; provided, that the contractual relationship between the physician and the charitable clinic is evidenced by a written contract, job description, or documentation, containing language that does not restrict the physician from exercising independent professional medical judgment in diagnosing and treating patients.
(2) For the purposes of this subsection (j), the term “charitable clinic” means an entity that meets the following standards:

(A) Has received a determination of exemption from the internal revenue service under 26 U.S.C. § 501(c)(3) or is a distinct part of an entity that has received such a determination of exemption;
(B) Has clinical facilities located in this state;
(C) Has a primary mission to provide health care or dental care services to low-income, uninsured, or underserved individuals;
(D) Provides one (1) or more of the following services for free or at a discounted rate:

(i) Medical care;
(ii) Dental care;
(iii) Mental health care; or
(iv) Prescription medications;
(E) Utilizes volunteer healthcare professionals and nonclinical volunteers; and
(F) Is not required to be licensed under § 68-11-202(a)(1).
(3) For the purposes of this section, the term “employing” shall not allow the employing of those physicians exempted in subdivision (e)(3).
(k) This section does not prohibit a licensed nonresidential office-based opiate treatment facility, as defined in § 33-2-402, from employing or contracting with a physician if the facility has a physician in the ownership structure of its controlling business entity and the employment relationship between the physician to be employed or contracted with and the nonresidential office-based opiate treatment facility is evidenced by a written contract or employment agreement containing language that does not restrict the physician from exercising independent professional medical judgment in diagnosing and treating patients.
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