Tennessee physician wins case on non-compete clause

State law allows non-compete contracts when the employer is a hospital or an affiliate of a hospital.

By Beth Wilson, AMNews contributor. Aug. 22/29, 2005.

Ending a 2½-year legal battle, the Tennessee Supreme Court recently ruled in favor of internist David Udom, MD, declaring invalid the non-compete agreement with his former employer, the Murfreesboro Medical Clinic.

In a 3-1 opinion, the court ruled that a patient's right to receive continued care from his or her physician outweighed the clinic's business interest, effectively negating non-compete agreements between physicians and private medical practices.

"The right of a person to choose the physician that he or she believes is best able to provide treatment is so fundamental that we cannot allow it to be denied because of an employer's restrictive covenant," the court stated.

The private practice, with almost 60 physicians, hired Dr. Udom in 2000. At that time, he signed a two-year employment agreement including a non-compete clause. It prohibited him from practicing medicine within a 25-mile radius for 18 months after the contract was terminated unless he paid the clinic roughly one year's salary as a contract "buy out."

When the medical clinic decided not to renew his contract, Dr. Udom looked for other positions around the Murfreesboro area, where he lived and wished to stay. He considered positions in Nashville, about 40 miles away, but was told he lived too far away to respond to emergencies, said Doug Janney, Dr. Udom's lawyer.

Dr. Udom said he also proposed working for area emergency rooms or a Veterans Affairs Medical Center, which he thought would not pose a competitive threat, to no avail. In the end, Dr. Udom set up private practice in Smyrna, Tenn., which was about 15 miles from the medical clinic. The MMC promptly filed suit charging that Dr. Udom had violated the non-compete provision.