Opinion ID: 2026744
Heading Depth: 3
Heading Rank: 2

Heading: Reasonableness of These Physician Restrictive Covenants

Text: This court properly holds that a blanket prohibition of all physician restrictive covenants should emanate from the legislature. However, my colleagues in the majority hold that the restrictive covenants presented in this case are reasonable. I cannot agree. The court improperly relies on a general analysis that ignores the unique nature of the physician-patient relationship. The general analysis is as follows. Courts usually hold that contracts in total restraint of trade are illegal and void. Bauer v. Sawyer, 8 Ill.2d 351, 354-55, 134 N.E.2d 329 (1956); Hursen v. Gavin, 162 Ill. 377, 379-80, 44 N.E. 735 (1896). However, the validity of a partial restraint of trade, e.g., a noncompetition agreement, is determined by its reasonableness in terms of its effect on the parties and the public. Under the rule of reason, a noncompetition agreement is reasonable and, therefore, enforceable, if it: (1) is no broader than necessary to protect a legitimate interest of the employer; (2) does not unduly burden the employee; and (3) does not harm the public. House of Vision, Inc. v. Hiyane, 37 Ill.2d 32, 37, 225 N.E.2d 21 (1967); Bauer, 8 Ill.2d at 355, 134 N.E.2d 329; Restatement (Second) of Contracts § 188 (1981). In relation to the employer's interest, the restraint must be reasonable as to activity, geographic area, and time. Hursen, 162 Ill. at 380-82, 44 N.E. 735; Restatement (Second) of Contracts § 188, Comment d, at 43 (1981). However, in my view, when a restrictive covenant deals with physicians, our traditional analysis should be applied in a manner which explicitly and specifically references the injury to the public in terms of patient care. Other states have so recognized. For example, in Statesville Medical Group v. Dickey, 106 N.C.App. 669, 673, 418 S.E.2d 256, 259 (1992), the court referenced the injury to the public as follows: To determine the risk of substantial harm to the public this Court has considered the following factors: the shortage of specialists in the field in the restricted area, the impact of plaintiff establishing a monopoly    in the area, including the impact on fees in the future and the availability of a doctor at all times for emergencies, and the public interest in having a choice in the selection of a physician. Accord Valley Medical Specialists v. Farber, 194 Ariz. 363, 371, 982 P.2d 1277, 1285 (1999) (concluding that patients' right to see the physician of their choice is entitled to substantial protection); Community Hospital Group, 183 N.J. at 60, 869 A.2d at 898, quoting Karlin, 77 N.J. at 424, 390 A.2d at 1169-70 (holding that court must evaluate several factors, including extent to which enforcing restrictive covenant would foreclose patients from seeing the departing physician if they desired to do so); Intermountain Eye, 142 Idaho at ___, 127 P.3d at 132 (We adopt the view expressed by the supreme courts of Arizona and New Jersey). Such realistic consideration of patient care recognizes human dignity and the importance of health care, rather than viewing human beings as a commodity to be considered only in the context of the employer and the employee. I observe that I am not suggesting a departure from our traditional common law analysis of restrictive covenants with its identified elements. Rather, in agreement with the above-cited enlightened courts, I consider patient care to be included in, or a subset of, the element of public harm. York v. Rush-Presbyterian-St. Luke's Medical Center, 222 Ill.2d 147, 305 Ill.Dec. 43, 854 N.E.2d 635 (2006), is a recent example of this court recognizing the uniqueness of the physician-patient relationship in the context of another general analysis. York involved a medical malpractice action claiming that a hospital was vicariously liable for the negligence of an independent-contractor physician under the doctrine of apparent agency. This court unanimously held that, in the context of health care, it would treat the element of reliance in the apparent agency analysis differently than in other contexts. The court explained that the relationship between a patient and health-care providers presents a matrix of unique interactions that finds no ready parallel to other relationships. York, 222 Ill.2d at 192, 305 Ill.Dec. 43, 854 N.E.2d 635. In the present case, I am disappointed that my colleagues in the majority fail to consider the uniqueness of physician restrictive covenants, as they recently did in York, but rather, treat all restrictive covenants alike. One might assume that this court would give particularized treatment to physician restrictive covenants in light of the unique considerations they present. Unfortunately, the majority of courts, including this court, currently view the physician-patient relationship as analogous to a simple merchant-customer relationship, thus comparing a very complex relationship to a relationship that is more routine. These courts do not analyze physician restrictive covenants any differently than they analyze covenants-not-to-compete between commercial parties. 41 Wake Forest L.Rev. at 192; accord 45 Rutgers L.Rev. at 4 (Courts do not analyze noncompetition agreements between physicians any differently than comparable provisions between commercial parties). The court today concludes that the general analysis applicable to all commercial restrictive covenants so completely takes into account patient-care considerations and the ethical obligations of physicians to patients that the court sees no difference in the two contexts. 225 Ill.2d at 67, 310 Ill.Dec. at 283, 866 N.E.2d at 94. I respectfully disagree. A profound disconnection exists between the prevailing physician restrictive covenant analysis and patient care. In applying the prevailing analysis to determine the reasonableness of a physician restrictive covenant, this court has held that the interest of the public is in having adequate medical protection. Bauer, 8 Ill.2d at 355, 134 N.E.2d 329. In Bauer, for example, this court reasoned that the reduction by one of 70 physicians serving a community would not cause such injury to the public as to justify refusing to enforce the restrictive covenant. Bauer, 8 Ill.2d at 355, 134 N.E.2d 329. This dated view of the public interest promotes the attitude that patients are widgetsnondescript objects that anyone has the right to service. Absent is any consideration of what effect enforcing the restrictive covenant would have on the interests of third parties, i.e., patient care or the ethical obligations of physicians. Further, this court has even misapplied this flawed numerical test. In a case where the physician argued that a scarcity of physicians would affect the public interest, this court reasoned: Nor is the contract injurious to any legitimate interest of the public. Defendant can be as useful to the public at some other place in the State as he can in Rockford, and the health of persons elsewhere is just as important. It cannot be said that the public interest is adversely affected if a physician decides to move from one community to another, nor does it become so if the move results from some agreement made in advance. If a severe shortage exists in any particular place young doctors will tend to move there, thus alleviating the shortage. Canfield v. Spear, 44 Ill.2d 49, 52, 254 N.E.2d 433 (1969). Accord Bauer, 8 Ill.2d at 355, 134 N.E.2d 329 (In any case, there is no reason why Dr. Sawyer cannot serve the public interest equally well by practicing in another community); 358 Ill.App.3d at 909, 295 Ill.Dec. 490, 832 N.E.2d 940 (applying this reasoning in the present case). Canfield, decided nearly 40 years ago, was the last time this court was presented with determining the reasonableness of a physician restrictive covenant (as opposed to a noncompetition agreement between veterinarians, Cockerill v. Wilson, 51 Ill.2d 179, 281 N.E.2d 648 (1972)). Commentators have long condemned the above-quoted reasoning. First, it completely ignores the interests of patients who lose their physician due to enforcement of the restrictive covenant. Those patients will presumably find little comfort in knowing that patients in some other area can now benefit from their doctor's services. 45 Rutgers L.Rev. at 30 n. 136 (describing this analysis as peculiar). Second, the notion that the benefit of adding a new doctor to a to-be-announced location equals the cost to incumbent patients caused by losing their doctor is ridiculous. The incumbent patients suffer in the short term a great deal more than the potential new patients gain. 41 Wake Forest L.Rev. at 203-04; see Restatement (Second) of Contracts § 188, Illustration 14, at 48 (1981) (focusing analysis on shortage of doctors in the affected area ). Indeed, in examining the temporal restrictions in these physician restrictive covenants, my colleagues in the majority observe: The measure of the potential harm to the public caused by the restriction is whether there exists a sufficient number of cardiologists in the area to meet patient needs. (Emphasis in original.) 225 Ill.2d at 79, 310 Ill.Dec. at 289, 866 N.E.2d at 100. Based on the current recognition of patient-care considerations and ethical obligations of physicians, I am disappointed that this court does not take the opportunity this case presents to expressly repudiate the flawed reasoning expressed in Canfield. Applying my proposed physician restrictive covenant analysis to the present case, I conclude that the record contains insufficient evidence to determine whether enforcement of these restrictive covenants is injurious to the public. To be sure, the record does not indicate a scarcity of physicians within the two-mile and five-mile geographic areas affected by the covenants. Further, the restricted hospitals in the geographic area are St. Mary of Nazareth Hospital, Norwegian American Hospital, St. Elizabeth Hospital, and Sacred Heart Hospital. The record contains evidence that there were more than a sufficient number of qualified cardiologists ready and willing to take care of plaintiffs' patients. For example, Norwegian American Hospital has five cardiologists serving a maximum of 100 patients, when only two or three cardiologists are necessary for a hospital of that size. However, and more importantly, the record contains insufficient evidence regarding the level of hardship that enforcement of these physician restrictive covenants would impose on plaintiffs' incumbent patients, if they wished to maintain their relationships with plaintiffs. For example, plaintiffs' employer argued that there was no basis in the record for an assumption that restrictive covenants among physicians will hinder patient care. In support, the employer asserted that plaintiffs were quickly granted privileges at a number of hospitals in the immediate area, including Weiss Memorial Hospital, Lincoln Park Hospital, Gottlieb Hospital, Westlake Hospital, Lincoln Park Hospital [ sic ] and Illinois Masonic Hospital. This argument misses the mark. The record does not disclose the addresses of these hospitals, or any evidence of the relative distances between these hospitals and those within the affected geographic areas. While this court could properly take judicial notice of the distances between locations (see, e.g., Dawdy v. Union Pacific R.R. Co., 207 Ill.2d 167, 177-78, 278 Ill.Dec. 92, 797 N.E.2d 687 (2003)), still absent would be evidence of the hardship, if any, this data would impose on plaintiffs' incumbent patients. [7] Based on this lack of essential evidence of record, I would reverse the judgments below and remand the cause to the circuit court for additional fact-finding.