Roger Strode Assesses FTC Noncompete Ban’s Impact to Nonprofit Health Care Providers

Foley & Lardner LLP Roger Strode commented on the U.S. Federal Trade Commission (FTC) testing its employee noncompete ban in the health care sector in the Law360 article, “FTC Noncompete Ban Raises Stakes For Nonprofit.”

Strode said that most major health care providers are scrupulous enough with their operations that they likely would not be vulnerable to any potential efforts by the FTC to test health care nonprofits under the noncompete rule. According to Strode, this scrupulousness is necessary for nonprofit health providers to maintain their tax-exempt status.

“If the IRS is treating you as tax-exempt and you haven’t heard a lot of noise from the IRS around your tax exemption, you probably don’t have an awful lot to worry about from this rule and the supposed scrutiny the FTC might give you,” Strode explained, noting though that providers could benefit from assessing the ways in which they could be subject to FTC scrutiny.

Organizations might also want to look at compensation schemes for leaders or high-earning doctors that could call tax-exempt nonprofit status into question, Strode added.

“If you’re an organization and you’re worried at all that maybe your exempt status has always been a little questionable and you don’t quite dot all your i’s and cross all your t’s,” Strode said, “it’s probably time to dot your i’s and cross your t’s.”

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