In October, the Hamilton County Court of Appeals reversed a hospital employer’s summary judgment in a declaratory judgment action brought by a former employee-physician on the grounds that the trial court had incorrectly increased the employee’s burden of proof. Wigton v. University of Cincinnati Physicians, Inc., No. 2021-Ohio-3576. There was no issue of stealing patients or confidential information. The employer justified the non-compete clause on the basis of the investment which it had made in the physician’s continuing education. Neither party moved for injunctive relief and both moved for summary judgment. Nonetheless, the trial court ruled that the physician failed to carry his burden of clear and convincing evidence (as required for injunctive relief). The court of appeals ruled that the burden of proof should have been the simple no dispute of material fact and judgment as a matter of law standard and remanded the case to decide whether the employer’s investment in continuing education was significant enough to restrict otherwise fair competition. In particular, the trial court was instructed to evaluate “whether the doctor’s “expertise was increased * * * more than would have been through experience as [a physician] in solo practice,” . . . and/or whether the training provided by the hospital facilitates some type of unfair competition.”
According to the Court, the plaintiff physician signed a
non-compete clause which prohibited him from practicing medicine for 18 months within
10 miles of any location where he had previously worked in the prior 12
months. After four years of employment ,
he accepted another position and sought a declaratory judgment on the enforceability
of the non-compete clause, but did not move for injunctive relief (which
requires clear and convincing evidence).
Instead, he sought a summary judgment (which only requires no disputes
of material fact and judgment as a matter of law). In opposing the summary judgment motion and
moving for its own summary judgment, the employer’s attorneys argued the injunctive
relief standard of proof (i.e., clear and convincing evidence). There was no dispute about the physician
attempting to steal patients or possessing any trade secrets or confidential
information. The employer was relying
simply on the amount of training it claimed to have provided the physician to
justify the restriction.
The appellate court observed that while reasonable
restrictions are enforceable, physician non-complete clauses are disfavored:
Noncompete restraints on physicians are, therefore, “strictly construed in favor of professional mobility and access to medical care and facilities.” Id. Nevertheless, “covenants not to compete in the medical profession are not per se unenforceable, and will be upheld if they are reasonable.” Id. That said, we only enforce noncompete restraints on physicians “to the extent necessary to protect an employer’s legitimate interests; if there is no legitimate interest to be protected, the noncompete is unreasonable.”
. . . Generally, noncompete restraints are only enforceable when the employee possesses protected business information (such as trade secrets or customer lists) that she can use against her former employer. . . . . Indeed, this is why noncompete caselaw focuses on preventing unfair competition, not simply ordinary competition.
Without ruling on whether the employer’s investment in the
physician’s training was a sufficiently strong interest to justify a
restriction on competition, the Court observed:
It concluded that UCP’s position as a nonprofit academic hospital provided a legitimate business interest in deterring defections like Dr. Wigton’s and that UCP invested in Dr. Wigton’s training. We take no position on the merits of these conclusions because they were assessed under an incorrect standard, but we do point out that in considering a physician’s training, a court should not simply evaluate whether a doctor received training (as all doctors do) but whether the doctor’s “expertise was increased * * * more than would have been through experience as [a physician] in solo practice,” id. at ¶ 28, and/or whether the training provided by the hospital facilitates some type of unfair competition.
NOTICE: This summary is designed merely to inform and alert
you of recent legal developments. It does not constitute legal advice and does
not apply to any particular situation because different facts could lead to
different results. Information here can change or be amended without notice.
Readers should not act upon this information without legal advice. If you have
any questions about anything you have read, you should consult with or retain
an employment attorney.
