Court Opinion

ID: 3155645
Source: CourtListenerOpinion
Date Created: 2015-11-18 16:05:44.431014+00
Date Added: 2024-06-11T12:14:28.890534
License: Public Domain

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
                             FOURTH DISTRICT

         INFINITY HOME CARE, L.L.C., and SYLVIE FORJET,
                          Appellants,

                                    v.

                      AMEDISYS HOLDING, LLC,
                             Appellee.

                             No. 4D14-3872

                          [ November 18, 2015 ]

   Appeal of non-final orders from the Circuit Court for the Seventeenth
Judicial Circuit, Broward County; Jeffrey E. Streitfeld, Judge; L.T. Case
No. CACE 14-014314 (07).

  Christopher V. Carlyle and David A. Monaco of The Carlyle Appellate
Law Firm, The Villages, for Appellant-Infinity Home Care, L.L.C.

   Cristina E. Groschel and Michael I. Kean of Berman, Kean & Riguera,
P.A., Fort Lauderdale, for Appellant-Sylvie Forjet.

   Courtney B. Wilson of Littler Mendelson, P.C., Miami, for appellee.

 On Appellant’s Motion for Rehearing and Motion for Rehearing En
                              Banc

TAYLOR, J.

   We decline to reconsider the merits of our decision, but grant rehearing
in part to correct a statement in the original opinion.

   In this appeal of a temporary injunction to enforce non-compete and
non-solicitation provisions of an employment contract, the main issue is
whether referral sources for home health services are a legitimate business
interest entitled to protection under section 542.335, Florida Statutes
(2012). Infinity Home Care, LLC, joined by its current employee, Sylvie
Forjet, appeals the temporary injunction, relying on the Fifth District’s
opinion in Florida Hematology & Oncology v. Tummala, 927 So. 2d 135
(Fla. 5th DCA 2006). Tummala held that referring physicians are not a
legitimate business interest under section 542.335 because the statute
requires that prospective patients be specific and identifiable. We decline
to follow Tummala in this case for the reasons discussed below and affirm
issuance of the temporary injunction.

   Amedisys Holding, LLC, provides home health care services such as in-
home nursing and hospice care. For eighteen months between January
2013 and June 2014, Forjet was employed by Amedisys as a Care
Transition Coordinator (CTC) in Broward County. As a CTC, Forjet was
primarily responsible for developing and maintaining Amedisys’s
relationships with individual case managers at certain health care facilities
that referred their patients to Amedisys for home health services.1 When
Forjet was hired, Amedisys required her to sign a Protective Covenants
Agreement which contained a non-compete provision and non-solicitation
agreement:

      Competition with Company. Employee covenants and agrees
      that during his/her employment, and for a period of one (1)
      year after Employee’s employment with the Company is
      terminated or ends for any reason (the “Non-Competition
      Period”), Employee will not, as an employee, consultant,
      independent contractor, officer, shareholder, director,
      partner, owner, or in any other capacity, provide, manage, or
      supervise services within the “Restricted Area,” as such term
      is hereafter defined, that are the same as or similar in purpose
      or function to those services Employee has provided to the
      Company during the “Look Back Period,” as hereafter defined,
      if such services are being provided for the benefit of any
      business, firm, proprietorship, corporation, partnership,
      association, entity or venture engaged in any part of the
      business (“Competing Business”) (hereinafter, the “Non-
      Compete Obligation”). . . .

      The “Restricted Area” is Broward County.

      Solicitation of Business. During Employee’s employment, and
      for a period one (1) year after Employee ceases to be employed
      by the Company for any reason, Employee will not knowingly
      contact, solicit, or communicate with a client, customer,
      patient or Referral Source of the Company for the purpose of

1 Forjet’s other duties included meeting with patients to develop case plans and
following the patients through plan completion.

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      encouraging, causing or inducing the client, customer, patient
      or Referral Source to cease or reduce doing business with the
      Company or to divert Business-related opportunities (home
      health or hospice care) to some person or entity engaged in
      any part of the Business (other than the Company), nor will
      Employee aid or assist any other person, business, or legal
      entity to do any of the aforesaid prohibited acts. The
      restriction created by this paragraph (the “Non-Solicitation
      Restriction”) is limited to clients, customers, patients and
      Referral Sources that Employee had material contact or
      business dealings with during the Look Back Period.

   In June 2014, Forjet left Amedisys to work for Infinity, a provider of
home health care services that competes directly with Amedisys. She
immediately began soliciting referral sources that had previously referred
business to Amedisys. The referral source of concern in this case is the
Cleveland Clinic.

   Amedisys filed suit against Infinity and Forjet for temporary and
permanent injunctions. Essentially, Amedisys alleged that Forjet violated
the restrictive covenants in her employment agreement by soliciting
Amedisys’s referral sources while working for Infinity. Count I of the
complaint is a breach of employment contract claim against Forjet, and
Count II is a tortious interference claim against Infinity. Infinity moved to
dismiss the complaint, arguing that referral sources are not a protectable
legitimate business interest under section 542.335, Florida Statutes, and
the holding in Florida Hematology & Oncology v. Tummala, 927 So. 2d 135
(Fla. 5th DCA 2006).

   The trial court held an evidentiary hearing on Infinity’s motion to
dismiss. Forjet, a registered nurse who has worked in the home health
care industry in Broward County since 1992, developed the Cleveland
Clinic as a referral source in 2006 while employed with another
competitor, Gentiva. One of the reasons Amedisys hired her was because
of her substantial relationship with the Cleveland Clinic. When Amedisys
hired her in late 2012, however, it specifically required her to honor her
non-compete agreement with Gentiva and not solicit referrals from any of
the case managers at the Cleveland Clinic until her agreement expired.
After her Gentiva agreement expired, Forjet began soliciting referrals from
the case managers at the Cleveland Clinic on behalf of Amedisys.
Amedisys considered these referral sources a vital source of business and
spent a substantial amount of time and money developing and
maintaining them. Forjet testified that she made regular sales calls and
provided modest entertainment (such as lunches, small gifts, and dinner)

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for the referral sources.

   When she resigned from Amedisys, Forjet began soliciting referral
sources that had previously referred business to Amedisys, including the
same case managers at the Cleveland Clinic. Amedisys’s vice president of
business development testified that after Forjet left, Amedisys’s referrals
from the Cleveland Clinic sharply declined. She could not, however,
quantify the decline in referrals from Cleveland Clinic or show that the
business it lost went to Infinity.

    Forjet testified that she believed the restrictive covenants in her
agreement with Amedisys prevented her from using only referral sources
she first developed while working at Amedisys, not sources she had used
for years. She testified that she did not develop any new referral sources
while working for Amedisys, and that all of her referral sources existed
before she was hired. However, Forjet conceded that there was a turnover
in case managers at the Cleveland Clinic during her employment with
Amedisys, and she thus had to develop relationships with the new case
managers that referred patients to Amedisys.

    After the hearing, the trial court granted Amedisys a temporary
injunction for one year. The court found that Forjet was violating the
restrictive covenants and that the restrictive covenants were enforceable
to protect Amedisys’s relationships with specific referral sources in
Broward County. In concluding that referral sources are a legitimate
business interest under section 542.335, Florida Statutes, the trial court
relied on Southernmost Foot & Ankle Specialists, P.A. v. Torregrosa, 891 So.
2d 591, 593 (Fla. 3d DCA 2004). The court declined to follow Tummala.

   Amedisys sought to establish two legitimate business interests: (1)
confidential business information, and (2) referral sources. Although the
court found that Amedisys established the existence of valuable
confidential business information, it did not find that Forjet had used this
information such that an injunction was necessary to protect it. The court,
however, found that Amedisys did establish the existence of substantial
relationships with referral sources that entitled it to a temporary
injunction.

   The issue we address in this appeal is whether “referral sources” for
home health services are a protectable “legitimate business interest” under
section 542.335, Florida Statutes. In Torregrosa, the Third District
accepted the trial court’s finding that “referral doctors” are a legitimate
business interest of the plaintiff’s podiatry practice, subject to protection
under a non-compete agreement. 891 So. 2d at 594. By contrast, the Fifth

                                     4
District held in Tummala that referral doctors are not a legitimate business
interest under the statute. 927 So. 2d at 139. Infinity urges us to follow
Tummala, arguing that it is more on point and provides an analysis of the
statute’s applicability to referral sources.

    Section 542.335, Florida Statutes, governs enforcement of non-
compete agreements and other restrictive covenants. It requires that a
restrictive covenant be justified by a “legitimate business interest” for
enforcement. § 542.335(1)(b), Fla. Stat. (2012). Section 542.335 provides
a list of “legitimate business interests,” but it specifically states that the
list is not exclusive. Among the legitimate business interests listed are
“[s]ubstantial relationships with specific prospective or existing customers,
patients, or clients.” § 542.335(1)(b)3., Fla. Stat. (2012).2

   In University of Florida, Board of Trustees v. Sanal, 837 So. 2d 512 (Fla.
1st DCA 2003), the First District construed the “specific prospective

2   Section 542.335 (1)(b), Florida Statutes, provides as follows:

         (b) The person seeking enforcement of a restrictive covenant shall
         plead and prove the existence of one or more legitimate business
         interests justifying the restrictive covenant. The term “legitimate
         business interest” includes, but is not limited to:

         1. Trade secrets, as defined in s. 688.002(4).

         2. Valuable confidential business or professional information that
         otherwise does not qualify as trade secrets.

         3. Substantial relationships with specific prospective or existing
         customers, patients, or clients.

         4. Customer, patient, or client goodwill associated with:

         a. An ongoing business or professional practice, by way of trade
         name, trademark, service mark, or “trade dress”;

         b. A specific geographic location; or

         c. A specific marketing or trade area.

         5. Extraordinary or specialized training.

         Any restrictive covenant not supported by a legitimate business
         interest is unlawful and is void and unenforceable.

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patients” language in the statute in affirming the trial court’s
determination that the university could not enforce its non-compete
agreement with a former physician-employee. The university had sought
to prohibit the physician from treating all persons residing in the
designated geographic area after his employment with the university
ended. The court, however, looked to the “clear and unambiguous”
language of the phrase “specific prospective patients” in concluding that
the statute limited the restrictive covenant to specific patients – not
prospective patients.    Finding no “legitimate business interest” in
unidentified prospective patients, the First District reasoned:

      We can discern no ambiguity in the language of section
      542.335(1)(b)3. It strikes us as relatively clear that the
      adjective “specific” used to modify “prospective patients” was
      intended to have its plain or ordinary meaning of “particular.”
      In such a situation, there is nothing to construe. See, e.g.,
      A.R. Douglass, Inc. v. McRainey, 102 Fla. 1141, 1144, 137 So.
      157, 159 (1931) (“The intention and meaning of the
      Legislature must primarily be determined from the language
      of the statute itself and not from conjectures aliunde. When
      the language of the statute is clear and unambiguous and
      conveys a clear and definite meaning, there is no occasion for
      resorting to the rules of statutory interpretation and
      construction; the statute must be given its plain and obvious
      meaning.”).     Courts are “without power to construe an
      unambiguous statute in a way which would extend, modify,
      or limit its express terms or its reasonable and obvious
      implications. To do so would be an abrogation of legislative
      power.” Am. Bankers Life Assurance Co. of Fla. v. Williams,
      212 So. 2d 777, 778 (Fla. 1st DCA 1968). Moreover, the
      construction advocated by the University would render
      meaningless the words “[s]ubstantial relationships” at the
      beginning of subparagraph 3 because one cannot have
      “substantial relationships” with “prospective patients” who
      are unidentified, and unidentifiable. Accordingly, we hold
      that, to qualify as a “legitimate business interest” pursuant to
      section 542.335(1)(b)3, a “relationship” with a “prospective
      patient” must be, in addition to “substantial,” one with a
      particular, identifiable, individual.

Sanal, 837 So. 2d at 516.

   In Tummala, the Fifth District extended the analysis in Sanal when it
ruled that referral sources are not legitimate business interests under

                                     6
section 542.335. The court concluded that recognizing referral sources for
prospective unidentified patients as a “legitimate business interest” would
be inconsistent with the statute, because the statute requires a
“substantial relationship” with a “specific” prospective patient. The court
explained:

      What referring physicians supply is a stream of unidentified
      prospective patients with whom Appellants had no prior
      relationship. Therefore, to accept referring physicians as a
      statutory “legitimate business interest,” would completely
      circumvent the clear statutory directive that “prospective
      patients” are not to be recognized as such. The trial court
      correctly found that: “[A]s stated in Sanal, to qualify as a
      ‘legitimate business interest,’ a ‘relationship’ with a
      ‘prospective patient’ must be substantial and one with a
      specific, identifiable individual and the lack of such a
      relationship with a patient does not become a legitimate
      business interest simply by virtue of being referred by a
      physician.” Sanal, 837 So. 2d at 515–16. We see no way to
      recognize referring physicians as a legitimate business
      interest and still give effect to the plain language of the
      statute.

Tummala, 927 So. 2d at 139 (footnote omitted) (quoting Univ. of Fla., Bd.
of Trs. v. Sanal, 837 So. 2d 512, 515-16 (Fla. 1st DCA 2003)). In footnote
4, the Fifth District acknowledged that its holding conflicted with the Third
District’s decision in Torregrosa, which approved the trial court’s finding
that referral doctors are a legitimate business interest.3

    The Fifth District opined that referral sources should be recognized as
a “legitimate business interest,” stating:

      [T]he evidence was clear that appellants (and most other
      medical specialists) receive the significant share of their new
      patients from referring physicians. They expend effort, money
      and energy to cultivate referral relationships. . . . Because
      referring physicians are the major source of new business for
      a specialist’s medical practice, they are perhaps Appellants’

3 The Florida Supreme Court initially accepted review and heard argument, but
then decided review was improvidently granted. Fla. Hematology & Oncology
Specialists v. Tummala, 969 So. 2d 316 (Fla. 2007). Justice Lewis dissented with
an opinion arguing the Court should resolve the conflict. Id. at 318.

                                       7
       most crucial “business interest.”

Tummala, 927 So. 2d at 138. Yet, the Fifth District considered itself
hampered by the express language of the statute.

   We do not agree that the statute should be so narrowly construed as to
exclude referral sources as a legitimate business interest. The statute does
not expressly exclude referral relationships and neither does the holding
in Sanal. In Sanal, the court correctly found that, with respect to patients
of a medical practice, the statute expressly defined “legitimate business
interest” to include only specific patients – not prospective ones.

   Section 542.335, however, clearly states that the legitimate business
interests listed in the statute are not exclusive. This allows the court to
examine the particular business plans, strategies, and relationships of a
company in determining whether they qualify as a business interest
worthy of protection. Relationships with specific referral sources, which
are not mentioned in the statute, are not the same as relationships with
unidentified prospective patients.      Here, it is undisputed that the
relationships Amedisys is trying to protect are its referral sources. As the
record shows, these doctors and clinics with whom it has developed
substantial relationships are the “lifeblood” of its home health care
business. The industry carefully cultivates these relationships over time
and heavily depends upon them as a source of business. These referral
sources appear to us to be a legitimate business interest as contemplated
by section 542.335, Florida Statutes.4

   In the contract covenant at issue here, “referral sources” are specifically
mentioned as a valuable business interest. Amedisys hired Forjet because
of her experience and contacts, compensated her accordingly, and
supported her in maintaining and expanding those contacts. She, in turn,
agreed not to solicit them for a competitor once she left Amedisys.

   Infinity argues that, even assuming referral sources are a protectable
legitimate business interest, Amedisys did not meet the statutory pleading
and proof requirements to enforce the restrictive covenants.

    Section 542.335(1)(c) provides:

4 Other jurisdictions have recognized referral sources to be legitimate business
interests. See Charles A. Carlson & Amy E. Stoll, Business is Business:
Recognizing Referral Relationships as Legitimate Business Interests Protectable By
Restrictive Covenants in Florida, 82 Fla. B.J. 49, 52 n.42 (2008).

                                        8
      A person seeking enforcement of a restrictive covenant also
      shall plead and prove that the contractually specified restraint
      is reasonably necessary to protect the legitimate business
      interest or interests justifying the restriction. If a person
      seeking enforcement of the restrictive covenant establishes
      prima facie that the restraint is reasonably necessary, the
      person opposing enforcement has the burden of establishing
      that the contractually specified restraint is overbroad,
      overlong, or otherwise not reasonably necessary to protect the
      established legitimate business interest or interests. If a
      contractually specified restraint is overbroad, overlong, or
      otherwise not reasonably necessary to protect the legitimate
      business interest or interests, a court shall modify the
      restraint and grant only the relief reasonably necessary to
      protect such interest or interests.

   Infinity argues that Amedisys failed to prove that its business was
impacted such that enforcement of the restrictive covenants was
necessary. It asserts that Forjet had the Cleveland Clinic as a referral
source long before her employment with Amedisys, and thus Amedisys
cannot show that she gained some unfair advantage by continuing to
communicate with those long-established sources. Additionally, Infinity
argues that the referral sources for home health services cannot be
legitimate business interests because the patients have choices and
ultimately decide which company they want to use.

    The record supports the trial court’s finding that Amedisys made a
sufficient evidentiary showing that enforcement of the restrictive
covenants was reasonably necessary to prevent unfair competition. Infinity
did not rebut the statutory presumption of irreparable harm and Amedisys
established by competent evidence that: (1) as an employee of Infinity,
Forjet was soliciting the same referral sources that had referred business
to Amedisys, and (2) Cleveland Clinic referrals to Amedisys declined after
Forjet left. As Amedisys points out, Infinity failed to cite any authority for
its argument that referral from a physician or case manager cannot be a
legitimate business interest merely because the patient can decline the
referral. Moreover, there is no evidence that a significant number of
patients decline referrals from their physicians and case managers. Here,
Infinity does not dispute that Amedisys suffered some harm from Forjet’s
solicitation of its referral source; it challenges only Amedisys’s failure to
show the extent of the harm.

   Finally, the record evidence supports the trial court’s finding that the

                                      9
restrictive covenants at issue in this case were limited in scope and
reasonable. See Jon Juan Salon, Inc. v. Acosta, 922 So. 2d 1081, 1084
(Fla. 4th DCA 2006).

    In sum, we hold that referral sources are a protectable legitimate
business interest under section 542.335, Florida Statutes. Accordingly,
we affirm the trial court’s order granting temporary injunctive relief against
Infinity and Forjet.

  We hereby certify conflict with Florida Hematology & Oncology v.
Tummala, 927 So. 2d 135 (Fla. 5th DCA 2006).

   Affirmed.

WARNER and CONNER, JJ., concur.

                            *         *         *

   Not final until disposition of timely filed motion for rehearing.

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