In March 2025, the Delaware Court of Chancery issued a decision in Weil Holdings II, LLC v. Jeffrey Alexander, DPM that should make every ophthalmologist in a PE contract pay attention. The court struck down a non-compete provision in an LLC agreement as facially unenforceable, and the Delaware Supreme Court affirmed the ruling later that year. The non-compete was structured the same way most PE-backed physician agreements are structured, and the court said it doesn't hold up.
What Happened in the Ophthalmology Non-Compete Case
The facts of the case are relevant to ophthalmology. A private equity firm acquired a healthcare practice management company in May 2023 and Dr. Alexander invested approximately $2.8 million for a 7.7% membership interest. The LLC agreement prohibited him from competing within a 15-mile radius of every affiliate practice location for as long as he held his membership interest plus two years after divestiture. The restricted territory covered 16 locations across four states, including states where Alexander had never treated a single patient.
The court found four problems with this structure. First, the duration was potentially indefinite because the agreement didn't give Alexander any right to divest his own interest. The company controlled when and whether the non-compete clock would start running. Second, the geographic scope was constantly subject to change because it was tied to affiliate practices that could expand at any time. The court said Alexander could "find himself suddenly in breach" as the territory shifted underneath him. Third, there was no legitimate business interest in restricting him from practicing in states where he'd never worked. Fourth, the court refused to narrow the non-compete to make it enforceable, citing the Delaware Supreme Court's recent decision in Sunder Energy v. Jackson where the court held that blue-penciling "creates confusion, encourages employers to overreach, and encourages litigation."
Why This Matters for Every Ophthalmologist in a PE Contract
PE-backed ophthalmology platforms use the exact same structure the court struck down. They embed non-competes in LLC agreements tied to equity ownership with no physician-controlled exit mechanism, and the geographic scope expands every time the platform acquires a new practice. Duration runs for the entire ownership period plus a tail, with the physician having no put right to start the clock. This is the standard playbook, and a Delaware court just tore it apart.
The Weil Holdings decision didn't happen in isolation. Cleveland Integrity Services v. Byers in February 2025 struck down a non-compete covering all of North America. The Sunder Energy decision in December 2024 established that courts won't rewrite overbroad non-competes to save them. And three Delaware trial courts in 2025 held that forfeiting a physician's equity as punishment for competing actually voids the consideration for the non-compete itself, making the restriction unenforceable. PE firms are being forced to choose between taking someone's equity or restricting their movement, but they can't do both.
The States Are Moving on Ophthalmology Non-Competes Too
In 2025 alone, 87 non-compete bills were introduced across 37 states and 38 of them specifically targeted healthcare according to Contract Diagnostics. Indiana banned non-competes between physicians and hospital systems effective July 2025. Colorado prohibited non-competes and non-solicitation agreements for physicians, PAs, and NPs effective August 2025. Texas limited physician non-competes to a one-year duration with a five-mile radius and a buyout cap equal to one year's compensation, and the agreement is void if the physician is terminated without cause. Arkansas and Wyoming enacted outright bans on physician non-competes. Pennsylvania limited enforcement to one year following voluntary departure only.
The FTC's proposed nationwide ban was struck down in court in August 2024, but the agency shifted to targeted enforcement in healthcare specifically. In September 2025, FTC Chairman Andrew Ferguson sent warning letters directly to large healthcare employers including HCA Healthcare, Tenet Healthcare, and United Health Services, stating that non-competes have "particularly harmful effects in healthcare markets" and "restrict patients' choices" especially "in rural areas where medical services are already stretched thin." The FTC filed an enforcement action against Gateway Services in September 2025 that released approximately 1,800 employees from their non-competes, and a January 2026 workshop confirmed healthcare as a priority sector for case-by-case enforcement.
What PE Doesn't Want Ophthalmologists to Know About Their Own Contracts
Between 37% and 45% of physicians in the United States are currently bound by non-compete agreements according to AMA and KFF estimates. PE-backed practice physicians have the highest percentage of non-competes across all practice environments. Even in California where non-competes are legally unenforceable, 12 to 19% of physicians report having one because the mere existence of the clause deters movement regardless of whether a court would enforce it.
PE firms layer non-competes across three separate agreements: the purchase agreement, the operating agreement, and the employment agreement. Each layer has different geographic scopes, different durations, and different enforcement mechanisms. Even when states ban employment non-competes, the purchase and operating agreement non-competes typically survive because most state bans explicitly exempt sale-of-business restrictions. Departure also triggers "bad leaver" provisions that force the physician to forfeit all equity, both vested and unvested, for zero compensation. The physician loses their ownership stake and their freedom to practice in the same transaction.
At its 2025 Annual Meeting, the AMA adopted policy to strongly oppose enforcement of non-compete clauses following any material change in practice ownership or control, directly targeting PE roll-up strategies where physicians get a fresh non-compete every time the platform sells. From Delaware courts to state legislatures to federal enforcement, the legal walls that PE built around physicians are cracking from multiple directions at once. For ophthalmologists who feel trapped in PE contracts, the question is whether they're going to wait for those walls to come down on their own, or start planning for what comes next.
This article is for general educational purposes and is not legal or financial advice.
Verdira is a healthcare acquisition platform focused on ophthalmology practices. Physician ownership. Transparent structure. No volume quotas. If you're a practice owner thinking about succession or a physician exploring ownership, we're open to thoughtful conversations.
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