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The Florida Bar Journal
March, 2018 Volume 92, No. 3
Healers Barred from Healing: Physician Noncompete Agreements

by Amy D. Ronner

Page 22

In Anton Chekhov’s story, “The Grasshopper,” Olga Ivanovna marries a physician, Osip Stepanitch Dymov, whom she sees as a “simple, very ordinary, and in no way remarkable man.”1 Olga denigrates her husband while she reveres others as “celebrities.” What does Chekhov’s Olga have to do with restrictive covenants? The conclusion of this article provides an answer.

In general, the law of noncompete agreements is a conglomerate of competing interests, rights, and policies.2 Employers assert the need to protect legitimate business interests along with entitlement to freely enter into and enforce contracts. Employees, arguing they have a right to work, unite with basic societal interests in promoting a free marketplace and preventing monopolies. While lawyers have disentangled themselves from such confliction, physicians have not. In fact, attorneys are unique because no other employee, professional or fiduciary, is exempt from the binding effect of a restrictive covenant.

Today, entities that hire physicians, like Health Maintenance Organizations (HMOs), hospitals, and practice groups, use restrictive covenants to bar former employees from engaging in or creating a competitive medical practice within a geographic region for a set period of time.3 These covenants also surface in partnership agreements and contracts for the sale of medical practices. In fact, they have become commonplace in the medical community partly because physicians, who have become increasingly mobile, change jobs more frequently now than in the past.4 Also, contemporary medical practices, defining themselves as commercial entities, use business devices to protect their bottom line.

Physicians execute such contracts because they are routinely presented as adhesion contracts. Also, in medicine, which is heavily regulated, it is sometimes easier for doctors (particularly those with no acumen for business) to join an extant HMO, hospital, or group with an administrative office than it is for them to try to set up shop on their own. Moreover, newly minted physicians, some burdened with debt and ravenous for that first real paycheck, can be predisposed to jumping into a job as quickly as possible. At times, physicians, who might be uncomfortable with lawyers, just sign off without representation.

Before tying the knot with the employer, some doctors do not envision a divorce on the horizon or consider the impact the restriction might have on their future mobility, financial health, and ability to continue practicing medicine.5 Sometimes the noncompete agreement is so prohibitive that it blocks physicians from making a move that might be better for themselves and their patients. When a restraint does not immobilize the doctor, it can still be life changing — it can force professionals not only to relocate, but also to jettison years of training for a new niche. The impact that might be less apparent, but one conceivably more pernicious, is the dilemmatic bind such covenants foist on doctors, who have an ongoing ethical responsibility to the very patients they are forced to abandon.6

In contrast, the American Bar Association and a Florida ethics opinion in conjunction with Rules of Professional Conduct of The Florida Bar disfavor restrictive covenants for lawyers and mandate they be narrowly construed to protect the lawyer-client relationship.7 Consequently, when lawyers leave firms, they can go where they please and bring their clients with them. In four steps, this article shows why physicians should enjoy the identical freedom, mobility, and right to continuously care for their patients.

Overview of Noncompete Agreements in Florida
English common law, frowning on noncompete clauses, deemed them per se invalid because they imposed personal hardship on both employees and the public.8 Today, most states, including Florida, enforce them.9 The present statute, which governs all such noncompete agreements, is F.S. §542.335.10 In 1996, its sponsors and drafters, John A. Grant, Jr., and Thomas T. Steele, praised their brainchild as effectuating the consummate balance between protecting an employer’s “legitimate business interests” and infringing minimally upon an employee’s right to earn a living.11 The history of Florida’s restrictive covenants, ostensibly rebutting Grant and Steele’s contention, discloses what has been a steady march toward imbalance — toward tipping the scales heavily in the employer’s favor.

After 1953, there was a shift away from the common law “rule of reason,” which disfavored restrictive covenants.12 From 1953 to 1990, the governing statute, §542.12, authorized “contractual restrictions upon competition.”13 The Florida Supreme Court, which upheld §542.12 against equal protection and due process challenges, explained that the statute aims to “protect the legitimate interests of the employer”14 and give employers a way to “prevent their employees and agents from learning their trade secrets, befriending their customers[,] and then moving into competition with them.”15 Judicial decisions under §542.12, however, recruited critics and among them were Grant and Steele, who felt that such emphasis on a “contract-oriented” methodology “led to a hodge-podge of conflicting and unprincipled decisions.”16 Then in 1990, §542.33 was born, but it, too, did not appease Grant and Steele:

"It created a standardless “unreasonableness” defense; it created a standardless 'contrary to the public health, safety or welfare' defense; it shifted the focus of enforcement to 'irreparable injury;' it erroneously suggested that a 'customer list' need not be a trade secret to be granted a measure of protection by contract; and it specified narrow instances of presumptive 'irreparable injury.'”17

In 1996, F.S. §542.335 interceded to redress that putative rampant “standardlessness” of prior law, but in the process it effectually hobbled employees.18 The current statute requires a court to “construe a restrictive covenant in favor of providing reasonable protection to all legitimate business interests….”19 It forbids courts to use “any rule of contract construction…to construe a restrictive covenant narrowly against the restraint, or against the drafter.”20 With injunctions, it is apodictic that parties seeking the equitable remedy are the ones who bear the burden of proving, among other things, that they will suffer irreparable injury.21 The 1996 statute foists the onus of proving irreparable injury not on the remedy’s seeker, but on the impacted employee.22 The statute likewise erases what is the traditional balancing of burdens by barring courts from “consider[ing] any individualized economic or other hardship that might be caused to [the employee].”23

The present statute, however, does toss employees a few scraps: For example, it permits courts to “consider the effect of enforcement upon the public health, safety, and welfare,” but with respect to this, it both giveth and taketh away.24 That is, another provision requires the court to “articulate specifically” the public policy precluding enforcement and also find “that the specified public policy requirements substantially outweigh the need to protect the legitimate business interest or interests….”25 The law does authorize courts to modify the restraint if the employee can meet his or her burden of establishing that it is “overbroad, overlong, or otherwise not reasonably necessary to protect…the legitimate business interest or interests.”26 Further, the court may factor in “all other pertinent legal and equitable defenses,” including the employer’s breach of contract, unclean hands, latches, waiver, and lack of consideration.27

Even with such proemployer legislation, a party may not (at least theoretically) enforce a restrictive covenant just to eliminate competition, but instead must “plead and prove the existence of one or more legitimate business interests….”28 In this regard, the statute supplies a nonexhaustive menu of “legitimate business interests,” which can include “valuable confidential business or professional information that otherwise does not qualify as trade secrets,” the “substantial relationships with specific prospective or existing customers, patients, or clients,” and “[e]xtraordinary or specialized training.”29 Incidentally, as discussed below, little about the “legitimate business interests” provision is perfectly clear.

Of course, drafters can never guarantee a pellucid, definitive, legislative response to every conceivable question that might arise in perpetuity, but with Florida’s restraint statute much hangs in limbo. To echo the gripes of the law’s own sponsors and drafters, who had faulted legislative predecessors, the current version has itself spawned unresolved issues, “standardlessness,” and its own “hodge-podge of conflicting and unprincipled decisions.”30 By way of example, it is not settled if and when an employee’s mere access to confidential information justifies enforcement of the restraint.31 It is also murky what constitutes “extraordinary or specialized training,”32 and whether a prevailing nonparty, like a competing new employer, may recover fees.33

An Implicit Recognition That Physicians Are Different
While some of the unanswered questions pertain to all businesses, our courts have visibly struggled with the task of applying generic employment law to what is essentially sui generis: namely, the arena of medical professionals. If we view the physician restrictive covenant decisions as a gestalt, what we detect is a conscious, or even possibly unconscious, bent on the part of Florida judges to mitigate the harshness of the law and give employees a break when the employees happen to be doctors. This is apparent in at least three areas: rulings that limit the scope of the noncompete agreement, that make it possible for some doctors to keep referring physicians, and that facilitate the ability of patients to find their doctors.

Florida courts appear to be more amenable to modifying the scope of the noncompete agreement for doctors than they do for other workers. Under the statute, which authorizes modification of overbroad, overlong, and unreasonable provisions in a noncompete agreement, courts are more likely to condone a wide regional restriction when marketplace products or unique nonmedical services are at stake. Consequently, there are some cases, like Proudfoot Consulting Company v. Gordon, 576 F.3d 1223 (11th Cir. 2009), which occasionally result in a judicial imprimatur on a staggering, draconian geographical scope, one that can conceivably oust individuals from their chosen vocation.34 Proudfoot did not involve the medical profession, but was a suit by a management consulting firm against a former employee who left to work for a rival.

In contrast to Proudfoot, when the dispute involves doctors or even others engaged in the medical field, courts are more amenable to reducing geographical parameters. One seminal case, Open Magnetic Imaging, Inc. v. Nieves-Garcia, 826 So. 2d 415 (Fla. 3d DCA 2002), involved the operator of magnetic resonance imaging centers in Dade, Broward, and Palm Beach counties who hired a nonphysician relations representative to market to doctors in part of Dade County. The Third District opined that the tri-county noncompete agreement imposed an undue burden on an individual who worked only in Dade and deemed modification to be appropriate.35

In the wake of Nieves-Garcia came other cases, like Southernmost Foot and Ankle Specialists, P.A. v. Torregrosa, 891 So. 2d 591 (Fla. 3d DCA 2004), rev. dismissed, 901 So. 2d 121 (Fla. 2005), and Litwinczuk v. Palm Beach Cardiovascular Clinic, L.C., 939 So. 2d 268 (Fla. 4th DCA 2006), in which courts have redacted restraints on physicians who were simply trying to continue caring for their patients. In Torregrosa, a medical podiatry practice sued a former doctor for breach of his restriction. The trial court, finding that the employer had “legitimate interests with regard to its patient base, referral doctors, specific prospective and existing patients, and patient good will,” nevertheless concluded that “the distance limitations…were excessive and overbroad.”36 The trial court said point blank that because the doctor had never worked for the employer “‘below Marathon and above Key Largo, he should be allowed to practice as he wishes.’”37 The district court, relying on Nieves-Garcia, found that the trial court properly exercised its discretion by “reduc[ing] the area.”38 Significantly, the district court also acquiesced in the trial court’s conclusion “that the public interest in allowing [the doctor] to maintain his staff privileges at both [of the hospitals at issue] outweighed the [employer’s] interest in enforcing its restrictive covenants.”39

Litwinczuk resulted in modification as well. Dr. Litwinczuk, who was bound by a noncompete agreement, resigned from the clinic, opened a practice “less than four blocks” from his old office, and began seeing his patients.40 The Fourth District determined that the trial court properly exercised its discretion by reducing the geographical scope from all of Palm Beach County to just the “region in which the clinic had a legitimate business interest to protect.”41

Recently, in Tarantola, M.D. v. Hengold, M.D., 214 So. 3d 726 (Fla. 1st DCA 2017), a case that did not involve geography, the court facilitated the doctor’s ability to continue working in her specialty. The noncompete agreement precluded the doctor from “[d]irectly or indirectly rendering medical services that include performing Mohs surgery….”42 The appellate court, finding that the trial court “misconstrued” the clause as barring the doctor from “practicing dermatological medicine,” reversed and remanded with directions to modify the injunction to let the doctor practice dermatology unrelated to Mohs surgery.43

More recently, the Florida Supreme Court has given doctors some hope that they might keep their referring physicians. In White v. Mederi Caretenders Visiting Services of Southeast Florida, LLC, No. SC16-28 & No. SC16-400, 2017 WL 4053930 (Fla. Sept. 14, 2017), the Florida Supreme Court said that it is possible for doctors to establish that referring physicians do not qualify as a “legitimate business interest” sufficient to justify a restriction. The court, diplomatically mediating what has been a somewhat prolonged inter-district quarrel,44 found that because the statute protects more business interests than those specifically enumerated, “the determination of whether an activity qualifies as . . . legitimate under the statute is inherently factual.”45 In foreshadowing its remand, the court said that unlike itself “[s]itting in a Tallahassee courthouse with a frozen record[,] . . . trial courts are well positioned to construe the phrase to determine the legitimacy of a particular business interest — in conjunction with the industry context and evidence adduced.”46 The court, thus, sent the matter back for the trial courts to eventually consider all facts necessary for final resolution.

Although the White decision dealt with home health service referral sources, it, providing guidance to doctors in analogous litigation, opined: “an interest in referral sources for specialist physicians may be a legitimate business interest, thus, capable of protection in some circumstances and unprotected in others.”47 For this, the court recruited the decision in Florida Hematology & Oncology v. Tummala, 927 So. 2d 135 (Fla. 5th DCA 2006), which had “noted that certain sources made referral “based upon their assessment of the individual doctor” and did “not refer to a ‘business’ or a ‘practice.’”48 The White court then added in a footnote that “a situation with similar facts to Tummala could come to the same [pro-doctor] result as [it did] in the Fifth District,” but the “proper evaluation” would “focus on the particular context and proof adduced instead of ruling that referral sources are unprotected as a matter of law.”49

Three, Florida courts have facilitated the ability of patients to find their doctors, who while honoring their noncompete agreements, open new offices. Florida courts, inclining to grant a reprieve, say that physicians do not violate their covenants when they merely advertise or announce their new location.50 The consensus is that while such notices may technically be a form of solicitation, they are “not direct” and do not violate their contractual restrictions.51

Lawyers and Doctors: Why Not Parity?
When faced with physician noncompete agreements, Florida courts tend to mitigate their impact: They narrow their scope, give doctors a chance to retain their referrals, and enable patients to find relocated doctors. Underlying the genre of cases is a cognitive dissonance on the part of decisionmakers, who either consciously or unconsciously intuit that something is amok when it comes to applying a one-size-fits-all “restraint of trade or commerce” to the unique context of those engaged in medicine. Perhaps the overarching message here is that physicians, just like attorneys, should not be bound by noncompete clauses.

The law of restrictive covenants has deified the legal profession: For us, such clauses are deemed unethical and the linchpin is, of course, the sacrosanct relationship between attorneys and their clients.52 Since the adoption of its first code of professional conduct, the American Bar Association has “prohibited restrictive covenants between attorneys” and the ABA Model Rules of Professional Conduct state that a lawyer shall not participate in making “a partnership, shareholders, operating, employment, or other similar type of agreement that restricts the right of a lawyer to practice after termination of the relationship.”53 Rule 4-5.6(a) of the Rules of Professional Conduct of The Florida Bar states that “[a] lawyer shall not participate in offering or making…[an] agreement that restricts the right of a lawyer to practice after termination of the relationship.”54 The Florida Bar Professional Ethics Committee Opinion elaborates: “The ‘special trust and confidence’ inherent in an attorney-client relationship dictates ‘that clients be given greater freedom to change legal representatives than might be tolerated in other employment relationships.’”55

In Florida, there are medical policies consistent with those of the ABA and Florida Bar. For example, the Florida Legislature, underscoring the importance of patients “mak[ing] an informed choice when selecting a physician,” has recognized that the protection of the doctor-patient relationship is a matter of “public health and safety.”56 If we cordon that to the noncompete statute itself, which requires courts to consider “the effect of enforcement upon the public health, safety, and welfare,” there seems to be a solid basis for a per se invalidation of physician noncompete agreements.57 Presently, however, there is no blanket prohibition of physician restrictive covenants.

The American Medical Association (AMA), whose opinions are merely advisory and nonbinding, has not taken a consistent or assertive stance against noncompete agreements.58 Although an in-depth historical account of the AMA’s shifting positions is beyond the scope of this article, it suffices to say that in 1933, the AMA declared restrictive covenants to be “unethical” and as interfering with a patient’s “free choice of a physician.”59 In 1960, the AMA, changing course, opined that there is no ethical bar to a “reasonable agreement not to practice within a certain area for a certain time, if it is knowingly made and understood.”60 More recently, the AMA stated that restrictive covenants are “not in the public interest,” but they are “unethical” only if they are “excessive in geographical scope or duration” or “fail to make reasonable accommodation of patient’s choice of physician.”61

The decision in Valley Medical Specialists v. Farber, 982 P.2d 1277 (Ariz. 1999) (en banc) is one in which the court discussed the AMA guidelines and stressed the “sensitive and personal nature of the doctor-patient relationship.”62 In Farber, the Arizona Supreme Court upheld a trial court decision to strike down an internist-pulmonologist’s restrictive covenant. In finding that the standard for construing such restrictions is one of reasonableness, the court explained that “the doctor-patient relationship is special and entitled to unique protection” and that “[i]t cannot be easily or accurately compared to relationships in the commercial context.”63 The court, weaving the AMA position on restraints into its reasoning, analogized it to the ABA proscription of lawyer noncompete agreements. While the court stopped short of ruling that covenants between physicians are per se invalid, it admonished that they must be “strictly construed” in light of their negative impact on the doctor-patient relationship.64

One Florida district court, philosophically aligned with the Farber court, analogously recognized that medicine is different and invalidated a liquidated damages clause because it “seriously impaired patients’ choice of a physician by discouraging doctors from continuing existing doctor/patient relationships.”65 The case, Humana Medical Plan, Inc. v. Jacobson, M.D., 614 So. 2d 520 (Fla. 3d DCA 1992), rev. denied, 623 So. 2d 494 (Fla. 1993), dealt not with noncompete agreements, but instead with an affiliated provider contract that bound doctors to pay a sum of money for any HMO member who chose to follow them after they left. The trial court, inter alia, deemed the clause to be void as against public policy. In affirming, the Third District “recognize[d] that an HMO…must contract with others in such a way as to protect its financial interests,” but found that such a clause “needlessly hinder[s] the continuation of [a doctor’s]…existing and successful doctor/patient relationships by driving a financial wedge between the doctor and his [or her] patient.”66 The court stressed that “patients are not property or chattel of an HMO” and elaborated on the “doctor/patient relationship [as]…vital to the provision of health care” and as evolving “over time, by a doctor learning a patient’s history and exercising professional judgment in not only evaluating a patient’s complaints, but in developing a specific strategy for treating a patient’s ailments.”67 Surely, the thinking behind the nullification of the liquidated damages clause, which interferes with “something as fundamental as the doctor/patient relationship,” fits noncompete agreements clauses as tightly as a surgical glove.68

Conclusion: Imbibing the Chekhovian Epiphany
In Florida, the legislative history of noncompete agreements reveals a steady march toward empowering the employer; but when it comes to physicians, the caselaw seems to be ebbing in the opposite direction — toward employee protection. Such disconnect may derive from a conscious belief (or even a subliminal instinct) on the part of decisionmakers that noncompete agreements for doctors are at least as undesirable as they are for lawyers.

Scholars have justified such clauses as necessary to protect business interests and to secure investments in human labor.69 Specifically, Professors Paul H. Rubin and Peter Shedd assert that these restrictions fairly serve to recapture an investment in employee training, which is macroeconomically sound because it encourages employers to provide training, and in turn, effectually augments the workforce’s skills and knowledge.70 Even if we accept that as gospel, we have to admit that since some law school graduates emerge from academia lacking certain skills requisite to real-life practice, firms frequently devote resources to training and mentoring their fledgling hires. Not only do they invest in human labor, but law firms, like any other business, have a plethora of legitimate business interests. Yet, the apotheosis of our profession has given lawyer-employees alone an escape from the bastille of noncompete agreements.

The parallels between the legal and medical professions are too obvious to ignore.71 One of the reasons restrictive covenants are taboo for lawyers is because they, impairing professional autonomy, undermine the duty to exercise independent professional judgment.72 Physicians, too, need and deserve the same autonomy to exercise independent judgment in providing medical care. While the policy of honoring clients’ rights to choose their own lawyers is a predominant one behind the rule against noncompete agreements, it is no more sacrosanct than the freedom of patients to choose their doctors. In fact, normatively (but not always) the choice of a lawyer can impact a client’s economic or financial well-being, while in medicine the selection of a doctor implicates health and bodily integrity, which can literally spell the difference between life or death. The legal profession, moreover, defends its ban on restrictive covenants as safeguarding a fiduciary relationship and confidentiality.73 Of course, the confidential and fiduciary bond between physicians and their patients is just as vital, time-honored, and indelibly ingrained in practice, policies, laws, and evidentiary rules.74

Significantly, the Florida statute expressly injects “public health, safety, and welfare” into the enforceability calculus.75 Another reason the law frowns on noncompete agreements for attorneys is because they provide public service, which is to be encouraged.76 Physicians, who also serve the public and have ethical duties to make their care available, directly trigger that putative statutory concern with “public health, safety, and welfare.”77

To put it bluntly, restrictive covenants for doctors are not just ill-advised, but actually injurious to the public. Interestingly, one reason the English common law denounced such clauses is because villainous masters misused them as ploys to keep apprentices or journeyman enslaved and to prevent them from bettering their lives, the economy, and society by quitting to join craftsmen guilds as full-fledged members.78 In what resembles an atavistic reversion to days of yore, today’s noncompete agreements can likewise block doctors from parting with an ill-suited employer and making a move that could inure to the benefit of patients and society at large.

Beyond that potential paralysis, such restraints can cause a shortage of necessary specialists in a particular community,79 and also thwart a gnomic truth: namely, that continuity of the doctor-patient relationship fosters quality health care.80 Medicine has always adhered to the unremarkable proposition that a patient’s ability to form over time a trusting relationship with a chosen doctor brings lots of health benefits.81 In contrast, when a restrictive covenant results in the involuntary loss of a physician, it can impose serious physical and psychological damage on the patient.82 It is, thus, unsurprising that the AMA not only underscores physicians’ legal and ethical duties to continue caring for patients, but also recommends procedures for terminating the patient relationship.83 Physicians blocked from seeing or even contacting former patients under their contracts are, thus, hobbled in their effort to fulfill their obligations to human beings, who (as the Third District once said) are neither “property” nor “chattel.”84

This article began with Chekhov and Olga’s marriage to Dymov, a doctor, who when mingling with his wife’s “celebrity” circle, “seemed strange, not wanted, and small.”85 Olga eventually has a tragically belated epiphany: she realizes that the doctor is in truth the “extraordinary, rare, great, man.”86 Perhaps, our law should imbibe a Chekhovian lesson by paying homage to legal and medical “celebrities” alike.

1 Anton Chekhov, The Grasshopper, Ward No. 6 And Other stories 141, 141 (Constance Garnett trans. 2003) (1892). Chekhov was admitted to study medicine at Moscow University and after graduating in 1884, he “was able to divide his time between ‘medicine…my lawful wedded wife, and literature my mistress.’” Aileen Kelly, Chekhov the Subversive in Anton Chekhov’s selected stories 501, 503 (Cathy Popkin ed., 2014) (quoting Anton Chekov’s letter to Suvorin, Sept. 11, 1888).

2 There are several scholarly articles on noncompete covenants. See, e.g., Harlan M. Blake, Employee Agreements Not to Compete, 73 Harv. L. Rev. 625 (1960) [Employee Agreements Not to Compete]; Phillip J. Closius & Henry M. Schaffer, Involuntary Non-Servitude: The Current Judicial Enforcement of Employee Covenants Not to Compete — A Proposal for Reform, 57 S. Cal. L. Rev. 531 (1984); Steve D. Shadowen & Kenneth Voytek, Economic and Critical Analyses of the Law of Covenants Not to Compete, 72 Geo. L.J. 1425 (1984).

3 For discussions of covenants not to compete in medical practices, see generally Paula Berg, Judicial Enforcement of Covenants Not to Compete Between Physicians: Protecting Doctors’ Interests at Patients’ Expense, 45 Rutgers L. Rev. 1 (1992) [hereinafter Judicial Enforcement of Covenants]; Kevin D. Koons, Physician Employee Non-Compete Agreements on the Examining Table: The Need to Better Protect Patients’ and the Public’s Interests in Indiana, 6 Ind. Health L. Rev. 253 (2009) [Physician Employee Non-Compete Agreements]; S. Elizabeth Wilborn Malloy, Physician Restrictive Covenants: The Neglect of Incumbent Patient Interests, 41 Wake Forest L. Rev. 189 (2006) [hereinafter Physician Restrictive Covenants]; John Sanchez, A Survey of Physician Non-Compete Agreements in Employment Under Florida Law, 35 Nova L. Rev. 63 (2010) [hereinafter Survey of Physician Non-Compete Agreements].

4 See Malloy, Physician Restrictive Covenants at 190 (“Prior to 1990, less than two percent of physicians changed jobs during their career. Physicians entering the workforce after 1990, in comparison, had switched employers on average about three times before 2000 [and]…recent studies indicate that approximately [10] percent of physicians may change jobs annually.”).

5 See Derek W. Loeser, The Legal, Ethical, and Practical Implications of Noncompetition Clauses: What Physicians Should Know Before They Sign, 31 J. L. Med. & Ethics 283, 284 (2003).

6 See Malloy, Physician Restrictive Covenants at 191 (discussing how these “covenants often present difficult economic and ethical challenges [for physicians]”).

7 In 1969, the American Bar Association adopted a code of professional conduct, which included Disciplinary Rule 2-108(A), which stated that a “lawyer shall not be a party to or participate in a partnership agreement with another lawyer that restricts the right of a lawyer to practice law after the termination of a relationship created by the agreement, except as a condition to payment of retirement benefits.” See also ABA Rule 5.6 (the same). See generally Stephen E. Kalish, Covenants Not to Compete and the Legal Profession, 29 St. Louis U. L.J. 423, 429-34 (1985) (giving a detailed history of the American Bar Association’s treatment of restrictive covenants between attorneys). See also Charles E. Cantu & Jared Woodfill V, Upon Leaving a Firm: Tell the Truth or Hide the Ball, 39 Vill. L. Rev. 783, 784 (1994) (pointing out that the ABA Committee stressed that law is a profession, not a business, and that clients cannot be considered mere merchandise). Rule 4-5.6 (a) of the Rules of Professional Conduct of The Florida Bar provides that “[a] lawyer shall not participate in offering or making…[a] partnership employment agreement that restricts the rights of a lawyer to practice after termination of the relationship, except an agreement concerning benefits upon retirement.” An ethics opinion states that under Rules 4-1.4, 4-1.5(g), and 4-5.6(a) of the Rules of Professional Conduct, restrictive covenants for lawyers should be narrowly construed to protect the lawyer-client relationship. Fla. Bar Prof’l Ethics Comm., Op. 93-4 (1995) (“The ‘special trust and confidence inherent in an attorney-client relationship dictates that clients be given greater freedom to change legal representatives than might be tolerated in other employment relationships.’”) (citing Rosenberg v. Levin, 409 So. 2d 1016, 1021 (Fla. 1982); and Dwyer v. Jung, 336 A.2d 498, 500 (N.J. Super. Ct. Ch. Div.), aff’d, 348 A.2d 208 (N.J. Super. Ct. App. Div. 1975).

8 Love v. Miami Laundry Co., 160 So. 32 (1935). Koons, Physician Employee Non-Compete Agreements at 256 explains that early “English common law [cases] date back to 1414, holding that an employee’s covenant not to compete was per se void.” See also Blake, Employee Agreements Not to Compete at 632 (noting that early cases involved apprentices or journeymen who faced “‘unethical’ masters attempting to prolong the traditional period of [training].”). In Florida, before 1953, under the common law doctrine (the rule of reason) restrictive covenants were disfavored. In Love v. Miami Laundry Co., 160 So. 32 (Fla. 1934), which is illustrative of that era, the Florida Supreme Court refused to enjoin former employees from driving laundry trucks belonging to the competitors of their former employer.

9 But see Cal. Bus. & Prof. Code §16600 (2016) (“[E]very contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void” and this prohibits “any agreement that restricts an employee from working for a competitor of his former employer or imposing a penalty for doing so.”).

10 Fla. Stat. §542.335.

11 John A. Grant, Jr. & Thomas T. Steele, Restrictive Covenants: Florida Returns to the Original “Unfair Competition” Approach for the 21st Century, 70 Fla. B. J. 53, 55 (1996) [hereinafter Restrictive Covenants].

12 See note 8.

13 Fla. Stat. §542.12.

14 Capelouto v. Orkin Exterminating Co. of Fla., 183 So. 2d 532, 534 (Fla. 1966).

15 Miller Mech., Inc. v. Ruth, 300 So. 2d 11, 12 (Fla. 1974).

16 Grant & Steele, Restrictive Covenants at 53.

17 Id. (quoting Act effective June 28, 1990, Ch. 90-216, 1990 Fla. Laws 1607 (amending Fla. Stat. §542.33(1989)).

18 Fla. Stat. §542.335 (1996).

19 Fla. Stat. §542.335(1)(h).

20 Id.

21 See generally Sanchez, note 3, at 70 (“It is black letter law that the party seeking an injunction bears the burden of proving, among other things that it will suffer irreparable injury if the injunction is denied.”).

22 Fla. Stat. §542.335 (j) (“The violation of an enforceable restrictive covenant creates a presumption of irreparable injury to the person seeking enforcement of a restrictive covenant.”) Under predecessor, §542.33, the employer bore the burden of proving irreparable harm. Fla. Stat. §542.33(2)(a) (1990).

23 Fla. Stat. §542.335(1)(g)1.

24 Fla. Stat. §542.335(g)4. See also Sanchez, Survey of Physician Non-Compete Agreements at 69 (“[I]n fact, the public interest rarely, if ever, has been relied upon to invalidate such restrictive covenants.”).

25 Fla. Stat. §542.335(i).

26 Fla. Stat. §542.335(c).

27 Fla. Stat. §542.335(g)3. See also N. James Turner, Successfully Defending Employees in Noncompete and Trade Secret Litigation, 78 Fla. B.J. 43, 44-46 (2004).

28 Fla. Stat. §542.335(1)(b).

29 Fla. Stat. §542.335(1)(b) 1-5.

30 See Grant & Steele, Restrictive Covenants at notes 11, 16, and 17.

31 In Proudfoot Consulting Co. v. Gordon, 576 F.3d 1223, 1235 n. 12 (11th Cir. 2009), the 11th Circuit, said that it is “unclear under Florida law when confidential information will justify a broad restriction that prevents an employee from working for a competitor.” The 11th Circuit noted that “other jurisdictions have recognized [that] threatened misappropriation can be enjoined where, based on the details of the trade secrets at issue, and the employee’s position at the new employer, disclosure of the trade secrets would be inevitable.” Id. (citing PepsiCo. Inc. v. Redmond, 54 F.3d 1262 (7th Cir. 1995)). The court declined to resolve the “uncertain issue” because the appellant had not “challenged the district court’s reliance on [the law] and findings about…confidential information that he received.” Id. But see Del Monte Fresh Produce Co. v. Dole Food Company, Inc., 148 F. Supp. 2d 1326 (S.D. Fla. 2001) (“[N]either Florida nor California have adopted the inevitable disclosure doctrine….”).

32 See, e.g., Hapney v. Central Garage, Inc., 579 So. 2d 127 (Fla. 2d DCA 1991), disapproved on other grounds by Gupton v. Vill,Key & Saw Shop Inc., 656 So. 2d 475 (Fla. 1995). In Hapney, 579 So. 2d at 132, the court said that “extraordinary or specialized training” is “difficult to define with any degree of precision” and when it “rises to the level of a protectible [sic] interest will vary from industry to industry and is a factual determination to be made by the trial court.”

33 Fla. Stat. §542.335(1)(k) states that even “[i]n the absence of a contractual [fee] provision…a court may award attorney’s fees and costs to the prevailing party.” It further states that “[a]court shall not enforce any contractual provision limiting the court’s authority under this section.” Id. The provision, however, is silent with respect to a subsequent employer’s entitlement to fees when that employer was never a party to the noncompete clause. In Sun Group Enterprises, Inc. v. DeWitte, 890 So. 2d 410 (Fla. 5th DCA 2004), the court approved an award of attorney’s fees to the new employer, a nonparty to the noncompete agreement, because of the successful challenge to the enforceability of a restrictive covenant. In Bauer v. DILIB, Inc., 16 So. 3d 318 (Fla. 4th DCA 2009), the court decided that the former employer could not recover fees from the new employer, a nonparty to the contract.

34 In Proudfoot, 576 F.3d at 1223, while the noncompete agreement itself did not define the geographic area, the 11th Circuit affirmed the district court’s decision that all of the United States, Canada, and Europe would be reasonable. In short, the employee had to either stop plying his trade or scour the globe for work on relatively remote foreign soil. The 11th Circuit cites other cases (none involving doctors) where courts approved broad scopes. Id. at 1238-39.

35 Open Magnetic Imaging, Inc. v. Nieves-Garcia, 826 So. 2d 415, 418 (Fla. 3d DCA 2002) (The trial court concluded that the area [Dade, Broward, and Palm Beach counties] was “far too broad.”).

36 Southernmost Foot and Ankle Specialists, P.A. v. Torregrosa, D.P.M., 891 So. 2d 591, 593 (Fla. 3d DCA 2004).

37 Id.

38 Id. at 595.

39 Id. The Third District, however, directed the trial court to “reinstate the two-year term of the restrictive covenant,” instead of cutting it back to “one year without giving a rationale for the modification.” Id. at 594-95.

40 Litwinczuk, M.D. v. Palm Beach Cardiovascular Clinic, L.C., 939 So. 2d 268, 270 (Fla. 4th DCA 2006).

41 Id. at 273.

42 Tarantola, 214 So. 3d at 726.

43 Id. at 727.

44 The Florida Supreme Court reviewed the decision in Mederi Caretenders Visiting Services of Southeast Florida, LLC v. White, 179 So. 3d 564 (Fla. 4th DCA 2015), which certified that its decision was in direct conflict with the decision in Florida Hematology & Oncology v. Tummala, 927 So. 2d 135 (Fla. 5th DCA 2006). The court consolidated that case with the decision in Hiles v. Americare Home Therapy, 183 So. 3d 449 (Fla. 5th DCA 2015), in which the court, relying on Tummala, certified direct conflict with the decision in Infinity Home Care, LLC v. Amedisys Holding, LLC, 180 So. 3d 1060 (Fla. 4th DCA 2015). The issue of referring physicians came to the Florida Supreme Court once before in Tummala, 969 So. 2d 316 (Fla. 2007), but the court determined that jurisdiction had been improvidently granted. At the time, Justice Lewis, who authored the recent White decision, dissented from the discharge of jurisdiction in Tummala, argued that there was a direct conflict between appellate courts, and said that the Florida Supreme Court should resolve the issue of whether referring physicians qualify as legitimate business interests. Id. at 317.

45 White, 2017 WL 4053930 at *8 (emphasis in original).

46 Id.

47 Id.

48 Id. at *9, n. 4 (quoting Tummala, 927 So. 2d at 139).

49 White 2017 WL 4053939 at *9, n.4.

50 See, e.g., Lotenfoe v. Pahk, 747 So. 2d 422, 424 (Fla. 2d DCA 1999) (finding that advertising by former physician was not direct solicitation); King v. Jessup, 698 So. 2d 339, 341 (Fla. 5th DCA 1997) (“Although placing an advertisement…is certainly a form of solicitation, we cannot conclude that such is a form of ‘direct solicitation’ of the past patients.”).

51 Pahk, 747 So. 2d 424; King, 698 So. 2d 341.

52 See note 7.

53 Model Code of Professional Responsibility DR2-108(A) (date); Model Rules of Prof’l Conduct R. 5.6(a) (Am. Bar. Ass’n 2016). See also note 7. The rule provides two exceptions: an agreement concerning benefits upon retirement or “an agreement in which a restriction on the lawyer’s right to practice is part of the settlement of a client controversy.” Id. at 5.6(a)-(b).

54 Fla. R. Prof’l Conduct R. 4-5.6(a) (2017). See also Fla. Bar. Prof’l Ethics Comm. Op. 93-4 (1995) (approved by the Board of Governors, 1995); see note 7.

55 Fla. Bar Prof’l Ethics Comm. Op. 93-4 (1995) (citing Rosenberg v. Levin, 409 So. 2d 1016, 1021 (Fla. 1982)).

56 Fla. Stat. §458.301.

57 Fla. Stat. §542.335(1)(g)4.

58 See Malloy, Physician Restrictive Covenants at 218 (“[T]he AMA’s guarded warning on restrictive covenants is merely advisory and does not bind MA members, unlike the Model Rules of Professional Conduct of the ABA.”).

59 Berg, Judicial Enforcement of Covenants at 6-7 (citing AMA, Digest of Official Actions, 1846-1958 at 123 (1959)). See also Koons, Physician Employee Non-Compete Agreements (analyzing the development and evolution of the AMA position on restrictive covenants).

60 Berg, Judicial Enforcement of Covenants at 7 (citing AMA, Principles of Medical Ethics, Opinions and Reports of the Judicial Council 25 (1960).

61 AMA, Current Opinions of the Council on Ethics and Judicial Affairs §9.02 (1989). Several other provisions of the AMA’s Code of Medical Ethics state that “[f]ree choice of physicians is the right of every individual.” Am. Med. Ass’n, Code of Medical Ethics §9.06 (1994), and that competition among physicians is not only ethical but encouraged. Id. at §6.11. For an account of “[t]he AMA’s indecision,” see Malloy, Physician Restrictive Covenants at 219.

62 Valley Medical Specialists v. Farber, 982 P.2d 1277, 1285 (Ariz. 1999) (en banc).

63 Id. at 1283.

64 Id. See also Murfreesboro Med. Clinic, P.A. v. Udom, 166 S.W.3d 674, 679 (Tenn. 2005) (noncompete agreements for doctors “disrupt continuity of care…and potentially deprive the public of medical services”). In Karlin v. Weinberg 390 A.2d 1161 (N.J. 1978), the court recognized that New Jersey had adopted the ABA rule prohibiting lawyer noncompete agreements, but it emphasized that “[t]he regulations governing physicians…do not contain any restriction similar to the ABA prohibition.” Id. at 1167-68. Unlike the Farber court, the Karlin court declined to consider principles of medical ethics that had not been adopted by any governing body or court. Id. at 1168. But see Alina Klimkina, Are Noncompete Contracts Between Physicians Bad Medicine? Advocating in the Affirmative by Drawing a Public Policy Parallel to the Legal Profession, 98 KY. L. J. 131, 148 (2009) [hereinafter Bad Medicine].

65 Humana Medical Plan, Inc. v. Jacobson, M.D., 614 So. 2d 520, 522 (Fla. 3d DCA 1992).

66 Id.

67 Id.

68 Id.

69 See generally note 3 (scholars and commentators discussing the policies behind noncompete agreements).

70 Paul H. Rubin & Peter Shedd, Human Capital and Covenants Not to Compete, 10 J. of Legal. Stud. 93 (1981). But see Berg, Judicial Enforcement of Covenants at 19, n. 89 (“[T]he…Rubin & Shedd’s model is still troubling [because w]hile it enables physician/employers to recover their investment…, it [is] achieve[d]…at the expense of patients.”).

71 See generally Berg, Judicial Enforcement of Covenants at 36-48 (discussing the treatment of restrictive covenants for doctors versus lawyers); Klimkina, Bad Medicine at 140-54 (comparing noncompete agreements in the two professions).

72 See note 7 (discussing the rules which prohibit noncompete agreements for lawyers).

73 See id.

74 AMA, Ch. 10: Opinions on Inter-Professional Relationships, (codifying the Code of Medical Ethics §10.01, which states that physicians must not reveal communications with a patient); see also id. (stating that in §10.015 that the physician-patient relationship is based on trust).

75 Fla. Stat. §542. 335(1)(g)4.

76 See note 7.

77 Fla. Stat. §542.335 (1)(g) 4. See also Am. Med. Ass’n, Code of Medical Ethics §E-9.065 (2016) (ethical obligation to care for the indigent). See also Murfreesboro Med. Clinic, P.A. v. Udom, 166 S.W.3d 674, 683 (Tenn. 2005) (both physicians and attorneys alike have to make their respective services available to the public).

78 See Blake, Employee Agreements Not to Compete at 632 (discussing restraints by “unethical” masters when “craft guilds were the dominant vehicles of economic activity”).

79 See Berg, Judicial Enforcement of Covenants at 28-30 (Restrictive covenants “will lead to a shortage of health care providers.”).

80 Id. at 31-36 (“[M]edical research demonstrates that continuity in the doctor-patient relationship fosters…quality health care and…involuntary termination of this relationship may have lasting, negative effects on patients.”).

81 The importance of continuity of medical care is well documented. See, e.g., Stephen P. Flynn, M.D., Continuity of Care During Pregnancy: The Effect of Provider Continuity on Outcome, 21 J. of Fam. Prac. 375, 375 (1985) (discussing how “[c]ontinuity of care is considered a principle of family medicine and…is thought to promote a closer relationship between the provider and patient”); Ralph B. Freidin, M.D. & Alan M. Lazerson, M.D., Terminating the Physician-Patient Relationship in Primary Care, 241 Jama 819 (1979) (discussing the importance of “establishing and maintaining the physician-patient relationship in providing longitudinal health care”); William B. Toms, M.D., M.P.H., An Analysis of the Impact of the Loss of a Primary Care Physician on a Patient Population, 4 J. Fam. Pract. 115 (1977) (“[T]he…‘hard’ deduction that can be made is that a certain number of patients involved in the retirement of this one physician in this one community had what they considered to be great difficulty in achieving further medical care after his retirement.”).

82 See Berg, Judicial Enforcement of Covenants at 33 (studies show that “involuntary termination of [a relationship with] a primary care physician…can be traumatic and long-lived.”).

83 See AMA, Ending the Patient-Physician Relationship (2016), (Rule 1.115). See also Malloy, Physician Restrictive Covenants at 207-208 (discussing how the “AMA provides steps that a physician should follow in terminating the patient-physician relationship).

84 Humana v. Jacobson, M.D., 614 So. 2d 522. See also De Cespedes v. Bolanos, 711 So. 2d 216, 218 (Fla. 3d DCA 1998) (“[A]s a matter of public policy, no patient is the ‘property or chattel’ of a corporate entity…[and a]s such, it is for the patients themselves to decide which of the parties they will continue with.”); Bloomington Urological Assocs., S.C. v. Scaglia, 686 N.E. 2d 389, 394 (Ill. App. Ct. 1997) (reversing contempt conviction of doctor, who, bound by a noncompete agreement, tried to contact a former patient to inquire about his condition under AMA Code §8.11).

85 Chekhov, The Grasshopper at 142.

86 Id. at 166.

Amy D. Ronner (B.A., M.A., Ph.D., and J.D.), a professor of law at St. Thomas University School of Law, teaches constitutional law, wills and trusts, and sexual identity and the law. Before pursuing her J.D., she taught English and world literature at the University of Michigan and University of Miami. After earning her law degree, she first clerked for Judge Eugene P. Spellman on the U.S. District Court for the Southern District of Florida and later worked in the appellate division of the Miami office of Holland & Knight. As the author of five books and more than 30 articles, she lectures internationally on law, therapeutic jurisprudence, and Russian literature.

The author acknowledges with gratitude her husband, Michael P. Pacin, M.D., and former student research assistant, Claudia Capdesuner (J.D., May 2017).

[Revised: 02-26-2018]