Ohio Physicians and Doctor non-competition agreements

posted by Neil Klingshirn  |  Jul 23, 2009 1:04 PM [EST]  |  applies to Ohio

Non-competition agreements are generally disfavored in the medical profession, but they are not per se unenforceable. Ohio Urology, Inc. v. Poll (1991), 72 Ohio App.3d 446, 451; General Med., P.C. v. Manolache, 2009 Ohio 124, P2-P3 (Ohio Ct. App., Cuyahoga County Jan. 15, 2009). 

Physician and Doctor Non-compete Law in Ohio

Traditionally, agreements not to compete were viewed as restraints of trade and, therefore, were held invalid at common law on the ground of public policy. Extine v. Williamson Midwest, Inc. (1964), 176 Ohio St. 403. Certain ancillary restraints, however, like those incident to employment agreements, were  upheld under the rule of reason. See 2 Restatement of the Law 2d, Contracts (1979) 41, Section 188(2). Today, covenants not to compete after termination of employment entered into between physicians may be enforceable. The key, however, is that they must be reasonable under the circumstances.

The Ohio Supreme Court set forth the test for the reasonableness of non-competition agreements in Raimonde v. Van Vlerah (1975), 42 Ohio St.2d 21:

A covenant restraining an employee from competing with his former employer upon termination of employment is reasonable if the restraint is no greater than is required for the protection of the employer, does not impose undue hardship on the employee, and is not injurious to the public.

The court emphasized that this rule is to be applied on a case-by-case basis.

In Williams v. Hobbs (1983), 9 Ohio App.3d 331, an appellate court applied the Raimonde rule to a case involving specific performance of a covenant not to compete in Franklin County against a skilled physician specializing in interventional radiology. After noting that his sub-specialty was not common among radiologists and that enforcement of the covenant would be unduly harsh given that the hospital from which he was precluded from practicing was one of the few osteopathic institutions in which he could practice his specialty, this court held that the covenant was unreasonable. This court wrote in paragraph one of the syllabus:

A covenant restraining a physician-employee from competing with his employer upon termination of employment is unreasonable where it imposes undue hardship on the physician and is injurious to the public, the physician's services are vital to the health, care and treatment of the public, and the demand for his medical expertise is critical to the people in the community.

Thus, restrictive covenants are enforceable, but only insofar as they protect some legitimate interest of the employer. Although restrictive covenants among physicians are not per se unenforceable, courts are less likely to find them reasonable in light of the injurious effect on the public interest.

External Links

Springfield, Ohio physician's Group defeats non-competition agreement.

posted by Neil Klingshirn  |  Jul 23, 2009 1:04 PM [EST]  |  applies to Ohio

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