DOCTORS AND NON-COMPETES: CASE #7
The Roanoke Valley is again the location of the next important physician non-compete case in Virginia. The case, Carilion Healthcare v. William Ball, was decided by the Roanoke County Circuit Court in 2001. Carilion is western Virginia’s 800 pound healthcare gorilla and began purchasing local medical practices in order to guarantee a stream of hospital patients.
Carilion and Dr. Ball entered into a Physician Employment Agreement (“PEA”) and a Noncompetition Agreement in July of 1996. The PEA set forth the details of the employment relationship while the Noncompetition Agreement addressed the purchase of the assets of Ball’s medical practice and the terms of the covenant not to compete. Ball remained employed with Carilion until the PEA expired on September 30, 2000. Carilion made an offer of continued employment to Dr. Ball, the reasonableness of which is not contested. Dr. Ball declined the offer and began practicing medicine independently of Carilion and litigation ensued.
The Noncompetition Agreement provided that Dr. Ball could not compete with Carilion for the provision of primary care medical services within 25 miles of the primary office for a two (2) year period following any termination of employment.
As I have discussed in previous blogs, non-competes are restraints in trade and are closely examined and strictly construed before the restriction can be enforced. Any ambiguity must be construed in favor of the employee. However, as in this case, Virginia courts are more likely to uphold and enforce non-compete contracts when they arise out of the sale of a business…the rationale being that a buyer and seller are on more equal footing that an employer and employee. To my thinking, the fact that Carilion purchased Dr. Ball’s professional practice was the main reason the court upheld the non-compete in this case.