How to Protect Your Practice’s Trade Secrets

dreamstimemaximum_51887081-flipBy: Shobha Lizaso

“Prevention is better than cure” is a maxim that has reigned in the healthcare industry for thousands of years; however, this phrase echoes through the halls of the legal profession as well.

Healthcare practices often neglect to appreciate the value of their confidential information as assets and the need to protect these assets. Although HIPAA and HITECH compliance aids in maintaining the confidentiality of patient records, it does not protect a provider’s trade secrets.

Trade secrets of a healthcare practice may include any of the following: patient lists, financial information, contract rates, contract terms client lists, collection rates, marketing tactics, pricing/discount information, and methods of doing business. If leaked, this information may be used by competitors to secure advantages over a healthcare practice. For example, patient lists could be used to solicit a practice’s patients or contract rates and terms can be used by a competitor to undercut the rates of a practice.

In simple terms, trade secrets can include any business information that is: a) not publicly known, b) is valuable due to its secrecy, and c) is subject to reasonable procedures to keep it confidential. The law gives a healthcare practice the right to an injunction which is an immediate court order stopping a party from using the practice’s trade secrets. However, the practice will be required to show the Court that reasonable steps were taken to protect this information from unwanted disclosure.

A healthcare practice can do the following to protect their important and confidential information from being disclosed and from being used to cause financial damage:

  • Retain an attorney who has healthcare and intellectual property experience to perform an assessment to determine what confidential information assets are present and to determine the level of protection is placed on the information.
  • Draft a Trade Secret Policy and incorporate it into the employee handbook.
  • Continually reiterate the Trade Secret Policy through periodic memos or newsletters, updates to the policy, annual performance reviews and staff meetings.
  • Require employees to sign a non-competition agreement, which precludes a former employee from working with a competitor in a position where a risk of use (or misuse) of confidential and information would exist.
  • Require employees to enter into a Non-Disclosure Agreement if their job duties may expose them to the information.
  • Require exiting employees certify in writing that they have returned all copies of secret material and given back all company property.
  • Label proprietary information with confidentiality warnings.
  • Restrict access to only those who have a business reason to know the information
  • Keep the information in a restricted or secure area.
  • Restrict access to the information through passwords.

Unlike other forms of intellectual property protection that offer limited life span, trade secrets can be kept indefinitely so long as the protected information remain confidential and not known publicly. A practice cannot control what a judge or a jury will determine with respect to information that was misappropriated from the practice, or what value the Court may determine that the information may have. However, a healthcare practice can protect its valuable information, but should set these protections in motion as soon as possible before an occurrence of a breach that could yield catastrophic financial damage later.

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