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Restrictive Covenants

Bayside Oncology/Hematology v. Fong, 2001 Cal. LEXIS 4753 (2001)

Also under Physician-patient relationship

Outcome:    Very unfavorable

Issue

This suit defends a physician’s right and obligation to notify his patients when he leaves one practice and starts another.

AMA interest

The AMA believes that when a physician leaves a group practice to start a new practice the physician’s patients should be informed of the physician’s new address and offered the opportunity to have their medical records forwarded to the departing physician.

Case summary

Dr. Fong contracted to serve as an oncologist for Bayside Oncology/Hematology Associates, a medical corporation (“Bayside”). Bayside fired him, and he then notified his former patients that he had opened an oncology practice in the same office complex in which Bayside was located.

Learning of the notice to the patients, Bayside sued Dr. Fong. Dr. Fong counterclaimed. Ultimately, the jury rendered a verdict on two of the counts in favor of Bayside and against Dr. Fong in the total amount of $1,256,500. On Dr. Fong’s counterclaim, the jury verdict, based on one of the counts, was $473,000. One element of the jury’s verdict against Dr. Fong (in the amount of $756,500) was based on a finding that he had violated the California statute against unfair competition by “soliciting” patients from Bayside.

The Court of Appeal affirmed in part and reversed in part. It found that Dr. Fong had improperly solicited his former patients.

Litigation Center involvement

The California Medical Association (CMA) and the Litigation Center filed an amicus brief supporting Dr. Fong. The brief argued that Dr. Fong’s actions, which conformed to the ethical standards of the CMA and the AMA, did not constitute wrongful solicitation.

West Penn Specialty MSO, Inc. v. Nolan, 737 A.2d 295 (Pa. Super. 1999)

Outcome:     Very unfavorable

Issue

The issue in this case was whether a court, through enforcement of a restrictive covenant, should limit the ability of a physician to make such patient referrals as she deemed medically appropriate.

AMA interest

The AMA supports open communications between physicians and patients.

Case summary

Dr. Nolan entered into a restrictive covenant as part of her employment contract. She promised that, should she leave her employment, she would not compete with her employer within a defined geographic area. She later terminated her employment and, in violation of her covenant, began to compete within the restricted area. The employer sued her, and the trial court preliminarily enjoined her from practicing medicine within the restricted area and from referring patients to physicians, hospitals, or clinics within the restricted area other than the former employer.

The injunction prohibited Dr. Nolan from making certain types of patient referrals, an activity not specifically proscribed by the covenant itself. The injunction thus prohibited her from communicating openly and honestly with her patients.

Dr. Nolan appealed the preliminary injunction, but the Pennsylvania Superior Court affirmed over a dissent.

Litigation Center involvement

The Litigation Center joined an amicus brief prepared by the Pennsylvania Medical Society in support of Dr. Nolan’s appeal. The brief did not contest the validity of the restrictive covenant or the general concept that Dr. Nolan should bear some adverse consequences for its violation. However, it did challenge the scope of the injunction entered against her. It pointed out that the limitation on her communications with patients prohibited her from practicing medicine ethically.