Florida Court Enforces Non-Compete
and Non-Solicit Agreements Against Tampa Physicians
Physicians who join physician groups are often required to sign employment agreements that contain restrictive covenants, such as non-compete and non-solicit provisions. In Florida, there is a unique judge-made exception to restrictive covenant law for physicians – namely, that patients may follow their healthcare provider. That exception notwithstanding, non-compete and non-solicit agreements are still very much enforceable against physicians.
Point and case: Surgery Center Holdings, Inc. v. Guirguist, 2020 WL 7330660 (2nd DCA December 11, 2020), which is a lawsuit involving four physicians who left a practice group in Tampa, Florida for a local competitor. As explained below, this case is a reminder for physicians that: (i) litigating “non-compete” disputes is generally expensive, can lasts months or even years, and the risk of winning or losing is often difficult to predict due to the unpredictability of judges; and, as a corollary; (ii) an extensive analysis employment agreements should be undertaken before separating employment if a physician is considering joining a new physician group, starting a new practice, or otherwise continuing providing healthcare services.
Based in Tampa, Florida, Surgery Center Holdings, Inc. (SCHI) operates a pain relief center called Tampa Pain Relief Center (TPRC) and a surgery center called Armenia Ambulatory Surgery Center (AASC). Four doctors, Guirguis, Otero, Cases, and Le, were previously employed by the pain relief center, TPRC. In connection with their work with SCHI, the physicians signed employment agreements that contained a non-compete provision and a non-solicit provision. In late 2018, the physicians left to work with a competitor.
In response, SCHI sued the physicians and asked the trial court for an immediate temporary injunction. After a two-day evidentiary hearing, the trial court denied the injunction motion. That was a win for the four physicians. SCHI appealed that decision, however. The appellate court reversed the trial court’s decision, effectively securing a temporary injunction against the four physicians that prevented them from working with the competitor.
A temporary injunction can be used to prevent former employees from continuing to violate a non-compete agreement during the pendency of a lawsuit. To obtain a temporary injunction in Florida in the restrictive covenant context, a plaintiff must satisfy both the requirements for a temporary injunction and meet the requirements of Florida’s restrictive covenant statute, Fla. Stat. § 542.335.
A temporary injunction requires the plaintiff must demonstrate: (i) irreparable harm to the plaintiff unless the injunction is provided; (ii) unavailability of an adequate legal remedy; (iii) a substantial likelihood of success on the merits; and (iv) that the public interest is supported by an injunction.
In the context of seeking a temporary injunction to enforce a restrictive covenant (which includes non-compete, non-solicit, and non-disclosure agreements), the plaintiff must also prove the existence of one or more legitimate business interest justifying the restrictive covenant. The term “legitimate business interests” includes, but is not limited to:
- Trade secrets (as that term is defined in Fla. Stat. § 688.002(4)).
- Valuable confidential information.
- Substantial relationships with specific prospective or existing customers or patients.
- Customer or patient goodwill associated with: (a) an ongoing business, by way of trade name, trademark, service mark, or trade dress; (b) a specific geographic location; or (c) a specific marketing or trade area.
- Extraordinary or specialized training.
Under Florida statute, a violation of an enforceable restrictive covenant creates a presumption of irreparable injury to the plaintiff. That statutory provision makes it easier for employers in Florida to obtain a temporary injunction, as irreparable harm is one of the requirements for the injunction.
The appellate court reversed the trial court, finding that based on the evidence the doctors breached the non-solicit agreement and non-compete agreement.
Physician Non-Solicit Agreements. The non-solicit agreements the doctors signed stated that, for two years after ending employment, the doctors “shall not provide services to any person who is a patient of the employer or who was a patient of the employer,” unless written consent was obtained by the employer and such services are provided outside of the 15-mile radius of the facility.
At the evidentiary hearing, TPRC (the former employer) had an expert testify that after the doctors left, they treated 644 of TPRC’s former patients and those patients receive multiple treatments a year. If those patients visit 12 times per year, that amounts to 8,000 patient visits that TPRC lost. The appellate court found that was sufficient evidence that the doctors violated their non-solicit agreements, i.e., providing services to former patients of the employer.
The appellate court did not address whether all those patients followed the physicians without any solicitation. Either the doctors did not make that argument or, more likely, it was uncontested that some or all the patients were solicited.
Physician Non-Compete Agreements. Three of the four doctors also signed a separate non-two-year compete agreement. That agreement stated the doctors may not “directly, or indirectly … (a) act as a director, officer, manager, employee, member or partner of, or have any equity or other financial interest in, any Person that owns and/or operates an ambulatory surgery center, hospital, licensed surgical facility or other outpatient surgical facility that is located within a twenty-five (25) mile radius of the Center.” A “Person” was defined to include any other individual or company.
The trial court incorrectly interpreted the non-compete agreement to only restrict the doctors from owning or operating a competing business. As the appellate court noted, however, it also prevented the doctors from being “employees” of a competitor. The evidence presented at the hearing showed that the three doctors were employees of an ambulatory center that was located within the 25-mile restricted territory. That was a violation of the non-compete agreements.
The appellate court noted that the non-solicit and non-compete were likely supported by legitimate business interests. Specifically, the appellate court pointed to: (i) the substantial relationships that the TPRC had with patients; and (ii) the patient goodwill associated with a geographic location. A corporate representative of TPRC testified at the evidentiary hearing that the business is patient-centric, that they invest in physicians and the geographic area to best serve their patient population, and that they strive for continuity of care with patients for pain management. The employer’s expert also testified that 84% to 87% of the patients live within a 15-mile radius, which was the territory of the non-solicit.
Finally, as to the public’s interest, the appellate court reiterated that the Florida non-compete statute provides that no court may refuse enforcement of an otherwise enforceable restrictive covenant on the ground that the contract violates public policy, unless such policy is articulated specifically by the trial court and the court finds that the specified public policy requirements substantially outweigh the need to protect the legitimate business interests established by the plaintiff.
The appellate court ordered the trial court to reconsider the enforcement of the doctor’s restrictive covenants based on the appellate court ruling. As a practical matter, the appellate court left the trial court with little choice but to grant a temporary injunction against the doctors.
Contact Information. For more information on non-compete rights, including defending against non-compete agreements, please contact Will Cantrell or Kevin Zwetsch at 1-800-698-6650. Cantrell Zwetsch, P.A. is a litigation boutique that focuses its practice throughout Florida and Georgia.