Senate Bill 951 (2026)

09/28/2026

Oregon

Senate Bill 951

Restrictive Covenants

Section 1. (1) As used in this section:

(a) “Affiliate” means a person that controls, is controlled by or is under common control with another person.

(b) “Management services” means services for or on behalf of a professional medical entity that include:

(A) Payroll;

(B) Human resources;

(D) Employee relations; or

(E) Any other administrative or business services that support or enable a professional medical entity’s medical purpose but that do not constitute:

(i) Practicing medicine, as described in ORS 677.085;

(ii) Enabling physicians, physician associates and nurse practitioners to jointly render professional health care services; or

(iii) Practicing naturopathic medicine.

(c) “Management services organization” means an entity that under a written agreement, and in return for monetary compensation, provides management services to a professional medical entity.

(d) “Medical licensee” means an individual who is licensed in this state:

(A) To practice medicine under ORS 677.110;

(B) As a nurse practitioner under ORS 678.375;

(D) To practice naturopathic medicine under ORS 685.100.

(e) “Medical purpose” means, as appropriate:

(A) The purpose of practicing medicine, as described in ORS 677.085;

(B) The purpose of enabling physicians, physician associates and nurse practitioners to jointly render professional health care services; or

(f) “Professional medical entity” means:

(A) A professional corporation, as defined in ORS 58.375;

(B) A professional corporation, as defined in ORS 58.376;

(D) A limited liability company or foreign limited liability company with authority to transact business in this state that is organized for a medical purpose;

(E) A partnership or foreign partnership with authority to transact business in this state, or a limited liability partnership or foreign limited liability partnership with authority to transact business in this state, that is organized for a medical purpose; or

(F) A limited partnership or foreign limited partnership with authority to transact business in this state that is organized for a medical purpose.

(2)(a) Except as provided in subsection (3) of this section, a management services organization or a shareholder, director, member, manager, officer or employee of a management services organization may not:

(A) Own or control individually, or in combination with the management services organization or any other shareholder, director, member, manager, officer or employee of the management services organization, a majority of shares in a professional medical entity with which the management services organization has a contract for management services;

(B) Serve as a director or officer of, be an employee of, work as an independent contractor with or receive compensation from the management services organization to manage or direct the management of a professional medical entity with which the management services organization has a contract for management services;

(C) Exercise a proxy or take or exercise on behalf of another person a right or power to vote the shares of a professional medical entity with which the management services organization has a contract for management services;

(D) Control or enter into an agreement to control or restrict the sale or transfer of a professional medical entity’s shares, interest or assets, or otherwise permit a person other than a medical licensee to control or restrict the sale or transfer of the professional medical entity’s shares, interest or assets;

(E) Issue shares of stock, or cause a professional medical entity to issue shares of stock, in the professional medical entity, in a subsidiary of the professional medical entity or in an affiliate of the professional medical entity;

(F) Pay dividends from shares or an ownership interest in a professional medical entity;

(G) Acquire or finance the acquisition of the majority of the shares of a professional medical entity; or

(H) Exercise de facto control over administrative, business or clinical operations of a professional medical entity in a manner that affects the professional medical entity’s clinical decision making or the nature or quality of medical care that the professional medical entity delivers, which de facto control includes, but is not limited to, exercising ultimate decision-making authority over:

(i) Hiring or terminating, setting work schedules or compensation for, or otherwise specifying terms of employment of medical licensees;

(ii) Setting clinical staffing levels, or specifying the period of time a medical licensee may see a patient, for any location that serves patients;

(iii) Making diagnostic coding decisions;

(iv) Setting clinical standards or policies;

(v) Setting policies for patient, client or customer billing and collection;

(vi) Advertising a professional medical entity’s services under the name of an entity that is not a professional medical entity;

(vii) Setting the prices, rates or amounts the professional medical entity charges for a medical licensee’s services; or

(viii) Negotiating, executing, performing, enforcing or terminating contracts with third-party payors or persons that are not employees of the professional medical entity.

(b) Conditions under which a professional medical entity may enter into an agreement to control or restrict a transfer or sale of the professional medical entity’s stock, interest or assets include:

(A) The suspension or revocation of a shareholder’s or member’s professional license in this or another state if the shareholder or member is a medical licensee;

(B) A shareholder’s or member’s disqualification from holding stock or an interest in the professional medical entity;

(C) A shareholder’s or member’s exclusion, debarment or suspension from a federal health care program or an investigation that could result in the shareholder’s or member’s exclusion, debarment or suspension if the shareholder or member is a medical licensee;

(D) A shareholder’s or member’s indictment for a felony or another crime that involves fraud or moral turpitude;

(E) The professional medical entity’s breach of a contract for management services with a management services organization; or

(F) The death, disability or permanent incapacity of a shareholder or member who is a medical licensee.

(A) A management services organization from:

(i) Providing services to assist in carrying out the activities described in paragraph (a) of this subsection if the services the management services organization provides do not constitute an exercise of de facto control over the administrative, business or clinical operations of a professional medical entity in a manner that affects the professional medical entity’s clinical decision making or the nature or quality of medical care that the professional medical entity delivers;

(ii) Purchasing, leasing or taking an assignment of a right to possess the assets of a professional medical entity in an arms-length transaction with a willing seller, lessor or assignor;

(iii) Providing support, advice and consultation on all matters related to a professional medical entity’s business operations, such as accounting, budgeting, personnel management, real estate and facilities management and compliance with applicable laws, rules and regulations; or

(iv) Advising and providing direction concerning a professional medical entity’s participation in value-based contracts, payor arrangements or contracts with suppliers and vendors;

(B) Collection of quality metrics as required by law or in accordance with an agreement to which a professional medical entity is a party; or

(3) Subsection (2) of this section does not apply to:

(a) An individual who provides medical services or health care services for or on behalf of a professional medical entity if the individual:

(A) Does not own or control more than 10 percent of the total shares of or interest in the professional medical entity;

(B) Is not a shareholder in or a director, member, manager, officer or employee of a management services organization; and

(C) Is compensated at the market rate for the medical services or health care services and the individual’s employment and services that the individual provides to the management services organization are entirely consistent with the individual’s professional obligations, ethics and duties to the professional medical entity and the individual’s patients;

(b) An individual who owns shares or an interest in a professional medical entity and a management services organization with which the professional medical entity has a contract for management services if the individual’s ownership of shares or an interest in the management services organization is incidental and without relation to the individual’s compensation as a shareholder, director, member, manager, officer or employee of, or contractor with, the management services organization;

(c) A professional medical entity and the shareholders, directors, members, managers, officers or employees of the professional medical entity if the professional medical entity functions as a management services organization or owns a majority of the shares of or interest in the management services organization;

(d) A physician who is a shareholder, director or officer of a professional medical entity and who also serves as a director or officer of a management services organization with which the professional medical entity has a contract for management services if:

(A) The physician does not receive compensation from the management services organization for serving as a director or officer of the management services organization;

(B) An action of the management services organization that materially affects the professional, ownership or governance interests of minority owners in the management services organization requires a vote of more than a majority of the shares of the management services organization that are entitled to vote, including the shares held by professional medical entities with voting rights in the management services organization; and

(C) The management services organization and all of the professional medical entities that have voting rights in the management services organization were incorporated or organized, and entered into agreements for the provision of management services, before January 1, 2026; or

(e) A management services organization that has a contract for management services with a professional medical entity if the professional medical entity is solely and exclusively:

(A) A PACE organization or engaged in providing professional health care services to a PACE organization, as defined in 42 C.F.R. 460.6, as in effect on the effective date of this 2025 Act, and authorized in this state as a PACE organization;

(B) A mental health or substance use disorder crisis line provider;

(C) An urban Indian health program in this state that is funded under 25 U.S.C. 1601 et seq., as in effect on the effective date of this 2025 Act;

(D) A recipient of a Tribal Behavioral Health or Native Connections program grant from the federal Substance Abuse and Mental Health Services Administration;

(E) An entity that:

(i) Provides behavioral health care, other than a hospital, that the Oregon Health Authority has certified to provide behavioral health care;

(ii) Has a contract for management services with an entity described in sub-subparagraph (i) of this subparagraph that is a nonprofit entity; or

(iii) Is a licensed opioid treatment program, a licensed medical provider that primarily provides office-based or medication-assisted treatment services, a provider of withdrawal management services or a sobering center;

(F) A hospital, as defined in ORS 442.015, or a hospital-affiliated clinic, as defined in ORS 442.612;

(G) A long term care facility, as defined in ORS 442.015, or an affiliate of a long term care facility; or

(H) A residential care facility, as defined in ORS 443.400, or an affiliate of a residential care facility.

(4) Subsection (2)(a)(A), (B) and (C) of this section does not apply to:

(a) An entity that is engaged in the practice of telemedicine, as defined in ORS 677.494, and does not have a physical location where patients receive clinical services in this state other than a physical location that would be necessary to comply with 21 U.S.C. 829(e), as in effect on the effective date of this 2025 Act; and

(b) A coordinated care organization, as defined in ORS 414.025, that before January 1, 2026, owned or controlled shares or an interest in a professional medical entity or had the power to manage or direct the management of the professional medical entity by contract or otherwise.

(5)(a) In any contract or other agreement between a management services organization and a professional medical entity or a medical licensee, a provision that authorizes or implements, or purports to authorize or implement, an act or practice that violates a prohibition set forth in subsection (2)(a) of this section is void and unenforceable.

(b) A medical licensee or professional medical entity that suffers an ascertainable loss of money or property as a result of a violation of a prohibition set forth in subsection (2)(a) of this section may bring an action against a management services organization with which the medical licensee or professional medical entity has a contract for management services, or a shareholder, director, member, manager, officer or employee of the management services organization, in a circuit court of this state to obtain:

(A) Actual damages equivalent to the medical licensee’s or professional medical entity’s loss;

(B) An injunction against an act or practice that violates the prohibition; and

(d) A court may award attorney fees and costs to a plaintiff that prevails in an action under paragraph (b) of this subsection.

Section 6. Sections 7 and 8 of this 2025 Act are added to and made a part of ORS 653.010 to 653.565.

Section 7. (1) As used in this section and section 8 of this 2025 Act:

(a) “Adverse action” means discipline, discrimination, dismissal, demotion, transfer, reassignment, supervisory reprimand, warning of possible dismissal or withholding of work, even if the action does not affect or will not affect a medical licensee’s compensation.

(b) “Management services organization” has the meaning given that term in section 1 of this 2025 Act.

(d) “Noncompetition agreement” means a written agreement between a medical licensee and another person under which the medical licensee agrees that the medical licensee, either alone or as an employee, associate or affiliate of a third person, will not compete with the other person in providing products, processes or services that are similar to the other person’s products, processes or services for a period of time or within a specified geographic area after termination of employment or termination of a contract under which the medical licensee supplied goods to or performed services for the other person.

(e) “Nondisclosure agreement” means a written agreement under the terms of which a medical licensee must refrain from disclosing partially, fully, directly or indirectly to any person, other than another party to the written agreement or to a third-party beneficiary of the agreement:

(A) A policy or practice that a party to the agreement required the licensee to use, in patient care, other than individually identifiable health information that the medical licensee may not disclose under the Health Insurance Portability and Accountability Act of 1996, P.L. 104-191, as in effect on the effective date of this 2025 Act;

(B) A policy, practice or other information about or associated with the medical licensee’s employment, conditions of employment or rate or amount of pay or other compensation; or

(C) Any other information the medical licensee possesses or to which the medical licensee has access by reason of the medical licensee’s employment by, or provision of services for or on behalf of, a party to the agreement, other than information that is subject to protection under applicable law as a trade secret of, or as otherwise proprietary to, another party to the agreement or to a third-party beneficiary of the agreement.

(f) “Non-disparagement agreement” means a written agreement under which a medical licensee must refrain from making to a third party a statement about another party to the agreement or about another person specified in the agreement as a third-party beneficiary of the agreement, the effect of which causes or threatens to cause harm to the other party’s or person’s reputation, business relations or other economic interests.

(g) “Professional medical entity” has the meaning given that term in section 1 of this 2025 Act.

(h) “Protectable interest” means costs to an entity that are equivalent to 20 percent or more of the annual salary of an employee with whom the entity has entered into a noncompetition agreement if the entity incurs the costs for:

(A) Marketing to and recruiting the employee;

(B) Providing the employee with a sign-on or relocation bonus;

(D) Providing support staff, technology acquisitions or upgrades and license fees related to the employee’s employment; or

(E) Similar or related items.

(2)(a) Notwithstanding ORS 653.295 (1) and (2), and except as provided in paragraph (b) of this subsection, a noncompetition agreement that restricts the practice of medicine or the practice of nursing is void and unenforceable between a medical licensee and:

(A) A person, as defined in ORS 442.015;

(B) A management services organization; or

(b) A noncompetition agreement between a medical licensee and another person that restricts the practice of medicine or the practice of nursing is valid and enforceable to the extent and under the terms provided in ORS 653.295 if:

(A) The medical licensee is a shareholder or member of the other person or otherwise owns or controls an ownership or membership interest and:

(i) The medical licensee’s ownership or membership interest in the other person is equivalent to 10 percent or more of the entire ownership or membership interest that exists in the other person; or

(ii) The medical licensee’s ownership or membership interest in the other person is equivalent to less than 10 percent of the entire ownership or membership interest that exists in the other person and the medical licensee has not sold or transferred the ownership or membership interest;

(B) The noncompetition agreement is:

(i) With a professional medical entity that provides the medical licensee with documentation of the professional medical entity’s protectable interest; and

(ii) Valid only within three years after the date on which the medical licensee was hired;

(C) The medical licensee is a shareholder or member of a professional medical entity and has a noncompetition agreement with the professional medical entity, but the professional medical entity:

(i) Does not have a contract for management services with a management services organization; or

(ii) Has a contract for management services with a management services organization that qualifies for an exemption under section 1 (3)(c) of this 2025 Act; or

(D) The medical licensee does not engage directly in providing medical services, health care services or clinical care.

(3)(a) Except as provided in paragraph (b) of this subsection, a nondisclosure agreement or non-disparagement agreement between a medical licensee and a management services organization, or between a medical licensee and a hospital, as defined in ORS 442.015, or hospital-affiliated clinic, as defined in ORS 442.612, if either the hospital or the hospital affiliated clinic employs a medical licensee, is void and unenforceable.

(b) A nondisclosure agreement or non-disparagement agreement described in paragraph (a) of this subsection is valid and enforceable against a medical licensee if:

(A) A management services organization, hospital or hospital-affiliated clinic terminated the medical licensee’s employment or the medical licensee voluntarily left employment with the management services organization, hospital or hospital-affiliated clinic, except that the management services organization, hospital or hospital-affiliated clinic may not enforce a nondisclosure agreement or non-disparagement agreement against a medical licensee for the medical licensee’s good faith report of information that the medical licensee believes is evidence of a violation of a state or federal law, rule or regulation to:

(i) A hospital or hospital-affiliated clinic; or

(ii) A state or federal authority; or

(B) The nondisclosure agreement or non-disparagement agreement is part of a negotiated settlement between the medical licensee and a management services organization, hospital or hospital-affiliated clinic. (c) Paragraph (a) of this subsection does not limit or otherwise affect any cause of action that:

(A) A party to, or third-party beneficiary of, the agreement may have with respect to a statement of a medical licensee that constitutes libel, slander, a tortious interference with contractual relations or another tort for which the party has a cause of action against the medical licensee; and

(B) Does not depend upon or derive from a breach or violation of an agreement described in paragraph (a) of this subsection.

Section 8. A management services organization or a professional medical entity may not take an adverse action against a medical licensee as retaliation for, or as a consequence of, the medical licensee’s violation of a nondisclosure agreement or non-disparagement agreement or because the medical licensee in good faith disclosed or reported information that the medical licensee believes is evidence of a violation of a federal or state law, rule or regulation to:

(1) The management services organization;

(2) A hospital, as defined in ORS 442.015, or hospital-affiliated clinic, as defined in ORS 442.612; or

(3) A state or federal authority.

See https://olis.oregonlegislature.gov/liz/2025r1/Downloads/MeasureDocument/SB951