April 08, 2015
In the recent case of Cardiovascular Institute of the South v. Abel, 2014-1268 (La. App. 1 Cir. 3/9/15), 2015 WL 1019500, a Louisiana court of appeal affirmed a trial court’s ruling that a valid non-competition agreement was enforceable against a physician without any discussion of public policy concerns or reasonableness.
The American Medical Association has long been opposed to physician non-compete agreements. Indeed, AMA Code of Ethics Opinion 9.02 provides in pertinent part:
Covenants-not-to-compete restrict competition, can disrupt continuity of care, and may limit access to care.
Physicians should not enter into covenants that:
(a) unreasonably restrict the right of a physician to practice medicine for a specified period of time or in a specified geographic area on termination of a contractual relationship; and
(b) do not make reasonable accommodation for patients’ choice of physician.
Nevertheless, Louisiana’s non-competition statute, Louisiana Revised Statute 23:921, provides that any person, who is employed as an agent, servant, or employee may agree with his employer “to refrain from carrying on or engaging in a business similar to that of the employer and/or from soliciting customers of the employer within a specified parish or parishes, municipality or municipalities, or parts thereof, so long as the employer carries on a like business therein, not to exceed a period of two years from termination of employment.” While the non-competition statute expressly prohibits non-compete agreements for automobile salesmen, it makes no mention of physicians and, so far, no Louisiana court has refused to enforce an otherwise valid non-compete against a physician on the basis of public policy.
The First Circuit Court of Appeal continued that trend in the Abel case. Dr. Abel was employed by Cardiovascular Institute of the South (“CIS”) as an “interventional cardiologist” at its clinic in Morgan City, Louisiana. In 2011, Dr. Abel limited his practice due to health reasons and as part of that transition, in December 2011, he executed a part-time physician agreement. Dr. Abel testified that he did not participate in drafting or negotiating the agreement and that the agreement was “just stuck in front” of him while he was in the middle of seeing a patient. The agreement contained a provision restricting Dr. Abel from “carry[ing] on or engag[ing] in the business of the practice of medicine in the sub-specialty of cardiology” in eleven parishes for a period of two years after the termination of his employment with CIS. Dr. Abel continued to work for CIS until December 24, 2013.
On April 1, 2014, Dr. Abel opened a private practice as part of Prevention Plus Clinic ("Prevention Plus") also located in Morgan City. Shortly therafter, CIS sought an injunction and damages against Dr. Abel. The 16th Judicial District Court ultimately enjoined Dr. Abel from practicing medicine in the sub-specialty of cardiology and from practicing in the fields of "internal medicine," "preventative medicine," and "wellness," where the focus of any services rendered by Dr. Abel would be cardiology.
On appeal, Dr. Abel did not argue that the agreement was unenforceable as a matter of public policy. Instead, he argued that his practice with Prevention Plus was not a cardiology practice, but was a preventative medicine practice. The Court found that while Dr. Abel’s practice at Prevention Plus may not have been identical to his practice at CIS, his new practice was properly characterized as “a business similar to that of the employer” as referenced in La. R.S. 23:921(C). The Court also found it significant that Dr. Abel’s new clinic clearly focused on the heart and circulatory system and that his work there was otherwise very similar to the practices and procedures he employed at CIS. Accordingly, the Court determined that his work at his new clinic fell within, and thus was prohibited by, the restrictions set forth in his non-compete agreement with CIS.
While it is interesting that the Court did not discuss the obvious public policy concerns associated with physician non-compete agreements—particularly, that patients are thereby prevented from being treated by their physician of choice—it is not surprising. An earlier ruling from a different Louisiana appellate court held that even though such public policy concerns were compelling, there was “nothing in Louisiana's public policy that would require [it] to nullify the agreement at issue” and that the policy concerns raised were “a matter for the legislature to address.” See Reg'l Urology, L.L.C. v. Price, 42,789 (La. App. 2 Cir. 9/26/07), 966 So. 2d 1087, 1095 writ denied, 2007-2251 (La. 2/15/08), 976 So. 2d 176.
As such, unless the legislature amends La. R.S. 23:921 to preclude non-compete agreements with physicians, it is reasonable to expect that Louisiana courts will continue to uphold otherwise valid physician non-compete agreements without engaging in an analysis of public policy concerns or reasonableness.
Should you have any questions about non-compete agreements, please contact us.
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