Clinics Can Enforce Noncompetition Agreements

A recent decision by the Illinois Supreme Court could potentially have a significant effect on the provision of health care for Illinois residents.

The case involved an agreement between a medical clinic in Chicago and two doctors who worked there. The doctors signed noncompetition agreements that provided that if they left the clinic they could not open offices for a certain number of years within a specified distance of any of the clinic's branches, or practice in hospitals where clinic doctors had practiced.

The purpose of such an agreement is to protect an employer by limiting the ability of a former employee to open up a competing enterprise and take away the former employer's business. Noncompetition agreements are generally enforceable, although courts will refuse to enforce an agreement that restricts the former employee's ability to compete for too long or in too large an area.

The doctors left their employment with the clinic and sued to have the noncompetition agreements declared unenforceable because they were contrary to public policy. The doctors argued that enforcing such an agreement against a doctor would interfere with the doctor's relationships with his clients, prevent people from seeing doctors of their choice, and interfere with the delivery of medical care by preventing doctors from working in certain areas.

The clinic argued that enforcing noncompetition agreements actually improved health care by encouraging established clinics to hire young doctors and to give them experience by providing certain protections against competition.

The court sided with the clinic. It found that, although the doctors made some strong arguments, they had not shown that the harm of enforcing noncompetition agreements against doctors was great enough to justify finding these agreements totally unenforceable. The court rejected the doctors' backup argument that the agreements were unenforceable because the clinic had previously breached its obligation to the doctors. From this decision, it appears that Illinois courts will enforce a covenant not to compete against doctors in the same way as they enforce them in many other professions.

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