Saturday, January 30, 2010

How Hospitals Can Help Invalidate Non-compete Clauses

Non-compete clauses are familiar to the business community as a means to prevent a former employee from using corporate trade secrets to compete against the former employer. But when a doctor is forced to leave a practice and three other doctors in that practice join him, that non-compete clause may also impact a hospital in the same geographic area as the non-compete. Hospitals, not wanting to lose admissions, are more than happy come to the aide of the exonerated:
A noncompetition clause in the four doctors' employment contracts prohibited them from practicing medicine within 25 miles of the clinic if they left it.

All four doctors have continued seeing patients at the clinic because their contracts allow them to work for 90 days after termination or resignation. The clause would have gone into effect in mid-February.

Meanwhile, the four cardiologists filed a preliminary injunction in Marion County Circuit Court against Salem CardioVascular Associates (ed note: their former employers), asking that they be allowed to continue practicing locally.

The possibility of having four well-regarded cardiologists suddenly leave the area prompted grave concerns at Salem Hospital, where the four doctors have admitting privileges. All four said they wished to remain in good standing at Salem Hospital.

Judge Graves granted the plaintiffs' preliminary injunction and prevented Salem CardioVascular Associates from enforcing the noncompetition clause.

Graves said enforcing such a clause could reduce the public's access to care and Salem Hospital's quality of service.

"I do find the public interest in this case is greater than the private interest of the three board of directors of this (cardiovascular) organization," Graves said.
So the moral of the story is, hospitals can be handy at invalidating non-compete clauses if you're a busy specialist who admits often to a local hospital who is also affected by your practice's non-complete clause.

Somehow I think that if these cardiologists had been employees of the hospital these same arguments for invalidating their non-compete ("quality"/patient access) would have never have seen the light of day before the judge.


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