A buyer approaches a well-established physician group and signs a nondisclosure agreement. Then it asks for everything: financials, payroll, contracts, and the number that matters most, which is how much each physician produces. Talks between the buyer and the seller go on for a year, and then the buyer walks away, with no offer and no explanation.
Within months, the group’s top producers are practicing for the buyer’s affiliate.
That’s the story told by the plaintiff in a lawsuit filed October 9 in the Business Court of Texas. Of course, it’s one side’s story; the story of the jilted seller. As of the time I last checked, the defendants haven’t responded, and, certainly, nothing’s been proven; the allegations are just that.
But every physician-owned group thinking about a sale, a merger, or even a “partnership conversation” should see the alleged facts as a warning.
What the Lawsuit Alleges
South Texas Spinal Clinic, a San Antonio spine practice founded in 1986, sued Surgery Partners, two of its affiliates, and one of the clinic’s former physician-owners. According to the clinic’s filing:
- In 2024, Surgery Partners approached the clinic about an acquisition and said it wanted to close by the end of 2025.
- In November 2024, the parties signed an NDA. The clinic opened its books, including productivity data showing what each physician generated.
- Negotiations focused on which physicians the buyer wanted to keep and what each one was worth.
- In December 2025, the buyer terminated all negotiations and made clear that it had no intention of following through with an acquisition. It provided no explanation, never made a purchase price offer, and didn’t identify any concerns. About six weeks of silence followed, during which time, the clinic alleges, the buyer was already recruiting its physicians.
- In March 2026, a Surgery Partners affiliate registered a new practice name. By the end of May, four of the clinic’s highest-producing physicians had left to join it.
The petition compares the buyer to thieves “casing a joint.” Whether that holds up is for the court to decide. But the lesson for medical group sellers doesn’t depend on who wins.
The Gap in the NDA
As the petition describes it, the NDA said the clinic’s information could be used “solely for the purpose of analyzing the possible business relationship.” But it doesn’t appear to have barred the buyer from hiring the clinic’s physicians or staff.
That difference matters.
A use restriction means the seller has to prove what the buyer did with the information, inside the buyer’s own walls. A no-hire or non-solicit clause draws a bright line: you don’t recruit our people for a set period, no matter what you know. The first leads to a lawsuit about intent. The second leads to a lawsuit about a signature.
Here are some factors that every selling medical group should consider.
- Stage what you disclose. Early in a process, give the buyer aggregated financials. Hold back physician-by-physician data until the buyer has signed a letter of intent, and anonymize it where you can.
- Put a non-solicit and no-hire clause in the NDA. Cover physicians, advanced practice providers, and key staff, and have the restriction run well past the end of talks.
- Restrict a walk-away buyer from entering your market. A buyer that drops the deal shouldn’t be free to build a competing practice next door using what it learned from you.
The real bottom line here is that due diligence is where a buyer learns exactly where your value lies. Make sure that knowledge comes with a price paid to you: the purchase price.
