Christopher J. Constantino Joins Firm’s Insurance and Litigation Groups
This year, the Vermont Legislature enacted Act 177, expanding protections for individual healthcare providers in employment agreements, partnership agreements, and other professional service arrangements. Section 8e adds 21 V.S.A. § 495q, “Agreements with Health Care Providers,” which makes certain provisions in covered agreements void and unenforceable if the agreement was entered into on or after July 1, 2026.[1]
The Act’s protections apply to contracts or agreements establishing “the terms of a partnership, employment, or any other form of professional relationship with a health care provider regarding the health care provider’s provision of health care services in Vermont.”[2] The Act defines “health care provider” as “a person licensed, certified, or authorized by law to provide professional health care service in this State to an individual during that individual’s medical care, treatment, or confinement.”[3]
The Act may therefore apply more broadly than healthcare providers anticipate. Its protections extend beyond employment agreements and may encompass partnership agreements, independent contractor agreements, and other professional services arrangements that govern a provider’s delivery of healthcare services in Vermont.
Restrictions on Contract Terms
Act 177 makes the following provisions void and unenforceable in covered agreements[4]:
- Post-termination noncompetes restricting where or when a provider may provide healthcare services.
- Restrictions on a departing provider’s ability to notify patients they directly treated if certain notice content requirements are met.
- Nondisparagement provisions restricting statements about another contracting party or an identified third-party beneficiary.
- Provisions inconsistent with Vermont law.
- Requirements to litigate in another state disputes arising from performance of the agreement in Vermont.[5]
The patient-notification protection allows departing providers to inform patients that they are continuing to practice, share new professional contact information, and explain patients’ right to choose their healthcare provider. Contractual departure procedures should not prohibit these communications.[6]
The Act includes a limited exception for certain territorial restrictions involving third-party companies providing nonclinical business support services. It also prohibits employers from retaliating against employees who exercise or attempt to exercise rights under the new statute.[7]
Implications for Healthcare Agreements
Act 177 changes the contractual protections available to healthcare organizations when a provider leaves. For covered agreements, a post-termination noncompete may no longer be enforceable merely because its duration or geographic scope appears reasonable, subject to the Act’s limited exception.[8]
Agreements entered into on or after July 1, 2026, as well as renewals and amendments, warrant individualized review to determine how the new prohibitions may affect their terms.
Our firm assists healthcare organizations and providers in evaluating how these changes may impact their implications for existing and future healthcare agreements.
For more information, contact Jacob Moulton
[1] Act No. 177, § 8e, 2026 Vt. Acts & Resolves (adding 21 V.S.A. § 495q(a), (f)).
[2] Id. (adding 21 V.S.A § 495q(a)).
[3] Id. (adding 21 V.S.A § 495q(d)).
[4] The act only explicitly voids the prohibited provisions, and not the arrangement itself.
[5] Supra note 1. (adding 21 V.S.A § 495q(a)(1)–(5)).
[6] Id. (adding 21 V.S.A § 495q(a)(2), (b)).
[7] Id. (adding 21 V.S.A § 495q(c), (e)).
[8] Id. (adding 21 V.S.A § 495q(a)(1), (c)).
