Employment Law, Health Care, Publications

Physician Group's Non-Compete Clause Fails

June 19, 2013

In Gastroenterology Consultants of the North Shore v. Meiselman, et seq., the First District Appellate Court affirmed the trial court’s denial of a preliminary injunction to restrain the defendant physician from soliciting and treating his former professional corporation’s patients pursuant to a restrictive covenant.  After an evidentiary hearing, the trial court ruled the plaintiff professional corporation had “little likelihood of success on the merits,” notwithstanding the defendant’s admission he treated patients he previously treated in the employ of the plaintiff in contravention of the “non-compete” clause.  As the court found the plaintiff failed to establish any “legitimate protectable interest” in the patients being treated by defendant, there was no need to address whether the covenant was reasonable in scope.

The determination whether a plaintiff has a legitimate protectable interest is based on the “totality of the circumstances”, on a case by case (“ad hoc”) basis.  Here, the defendant physician (who was involved in the formation of the plaintiff corporation) had been in practice ten years prior to the formation of the corporation and developed his own referral sources and patient base.  After the defendant physician joined plaintiff’s group, the defendant continued to maintain his own offices, utilize his existing referral service, and perform his own billing.  The plaintiff failed to prove an “investment of time, effort or money in the development of (the defendant’s) relationship with his patients,” any misappropriation of confidential information, or any “near permanent relationship” with the patients the defendant treated after departing.

On these facts, the plaintiff fell short of meeting its burden for a preliminary injunction prohibiting defendant and his new group from treating the plaintiff’s former patients.  Gastroenterology Consultants demonstrates yet again that Illinois courts will use a “totality of the circumstances” evidentiary approach in examining the enforceability of a restrictive employment covenant.  This analysis will proceed on an ad hoc basis, inherently adding uncertainty to the efficacy of these provisions – no matter how carefully drafted.  For the party seeking enforcement of the non-compete, an evidentiary record establishing a “legitimate protectable interest” in the defendant’s business is essential.

View All Insights

Stay Connected

Join our e-newsletter for the latest
from Johnson & Bell.

Related Service(s)

Related Industry Sector(s)

Johnson & Bell

33 West Monroe Street
Suite 2700
Chicago, Illinois
© 2022 Johnson & Bell, Ltd. All Rights Reserved.