Anesthesia Contract Non-compete Unenforceable in Michigan June 2015

[GasDoc789]

http://courts.mi.gov/opinions_order...cuments/C06-2015-147134-CK (Jun 15, 2015).pdf

If you work for American Anesthesiology and you want a better deal in a neighboring town within 30 miles, you probably violate your non-compete. However, in anesthesiology typically an OR based anesthesiologist does not take patients, business, or goodwill to another job. There is now a precedent set in Michigan that this contract is unenforceable for OR based anesthesiologists. This case above represents American Anesthesiology of Michigan threatening arbitration and litigation to a doctor who found a job in the same city. Within 1 month of the doc leaving, the court was able to DENY American Anesthesiology's request for injunction. This allowed the doc to work where he wanted.

I think this is a big victory for all physicians under this contract. I would love to hear of any other situations throughout the United States.

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[TaoistDoc]

Hell yeah. Those non competes are a joke in anesthesia, except maybe for trying to work in the same hospitals as the group you worked at.

 

[criticalelement]

Hell yeah. Those non competes are a joke in anesthesia, except maybe for trying to work in the same hospitals as the group you worked at.

the whole specialty is a joke.

 

[TaoistDoc]

the whole specialty is a joke.

Its a good thing I like jokes.

 

[deleted126335]

Don't read too much into this decision. This is not a court decision invalidating the agreement. It is failure to grant a temporary injunction to prevent this guy from working in his noncompete zone while the case makes it way through the court system... A very different standard.
Enforceability of these things varies greatly. Sometimes they, are sometimes they aren't.

 

[Mman]

Don't read too much into this decision. This is not a court decision invalidating the agreement. It is failure to grant a temporary injunction to prevent this guy from working in his noncompete zone while the case makes it way through the court system... A very different standard.
Enforceability of these things varies greatly. Sometimes they, are sometimes they aren't.

It is also a decision that mentions he is likely to lose his case. And it's also specifically referencing a Michigan state law that wouldn't be applicable in other states. It may be interesting to follow it going forward and see what happens.

The thing I find odd is that it sounds like he was a partner in the practice that sold to American. So he took their money and signed the contract and then violated it?

 

[aneftp]

It may take years. But eventually these non competes will all be ruled invalid there are no intellectual property being secretly compromised if one doc goes to another practice. (Referencing practices that don't have their own patients)

Equal protection clause?

Seems like employers can't cherry pick 30 mile radius in one area and 5 miles in another area.

 

[aneftp]

It is also a decision that mentions he is likely to lose his case. And it's also specifically referencing a Michigan state law that wouldn't be applicable in other states. It may be interesting to follow it going forward and see what happens.

The thing I find odd is that it sounds like he was a partner in the practice that sold to American. So he took their money and signed the contract and then violated it?

Don't be so sure about that.

Read the opinion closely. Two things have to happen.

1. Court says he's likely in breach of contract (that's obvious cause he's within the 30 mile radius) and also not saying away for 1-2 years or whatever is in the contract.

2. But read the last page. Court says American anesthesiology has failed to prove damages. This is where is will get complicated for American anesthesiology. They can provr he's stealing patients because of the nature of anesthesiology doesn't recruit its own patients.


They could try to argue "recruitment fees" damages to replace outgoing doc (say $20-40k) typical head hunter fee.

Considering it's a big city and the demand/supply of anesthesiology in 2015. I'd wager on the lower of the 20k "recruitment fee".

In the end mednax with its unlimited legal resources may try to continue the legal case in hopes this doc runs out of money. They don't want to setup a precedent to have docs leaving at will and ignoring non competes.

Different states have different laws.

But I am glad this doc challenged mednax non compete. Because courts usually refer to other legal rulings as guideline. And the more cases the better.

 

[jwk]

I'm sure a lot of people will be watching this. Any number of AMC's have non-competes for all staff, docs and anesthetists. With the possible exception of chronic pain patients, nobody is siphoning off patients with a move down the road a few miles. We even have surgical assistants with non-competes. Their only purpose is punitive, as it is with the ones for anesthesiology. Recruitment fees? I doubt seriously American Anesthesiology is having trouble recruiting on their own, and they're certainly not paying recruiters a dime to bring people into the desirable markets that they have a presence. They're nowhere near BFE.

 

[Man o War]

I truly hope the partners of this group walked away with a ton of cash because they sold out one of the best private practices in the state to a damn AMC with BS non compete clauses like this one.

 

[aneftp]

I truly hope the partners of this group walked away with a ton of cash because they sold out one of the best private practices in the state to a damn AMC with BS non compete clauses like this one.

Well that's well it will get tricky.

He sold out and got monetary compensation.

It's not like he was a true employee.

He made a deal with mednax in exchange for X years plus x years non compete.

Seems to me like he wants his cake and eating it also. Aka he was probably used to making 500k. Mednax gave him a flat check (taxed at 15%) for 1-1.5 million in exchange for X years. But his income probably reduced down to 300-350k.

Now he probably sees he can make 300k at cush outpatient job no calls no weekends rather than full call schedule for similar money.

 

[Man o War]

Well that's well it will get tricky.

He sold out and got monetary compensation.

It's not like he was a true employee.

He made a deal with mednax in exchange for X years plus x years non compete.

Seems to me like he wants his cake and eating it also. Aka he was probably used to making 500k. Mednax gave him a flat check (taxed at 15%) for 1-1.5 million in exchange for X years. But his income probably reduced down to 300-350k.

Now he probably sees he can make 300k at cush outpatient job no calls no weekends rather than full call schedule for similar money.

Yep. That's my understanding of how these things go down. I do hope legal precedents start being set invalidating these punitive non compete clauses. I understand groups having reasonable ones such as not being allowed to start your own group and poaching the contract at the same hospital, but in that area of Detroit, you're basically locked out of working anywhere in the metro area. That should be illegal.

 

[Mman]

Don't be so sure about that.

Read the opinion closely. Two things have to happen.

1. Court says he's likely in breach of contract (that's obvious cause he's within the 30 mile radius) and also not saying away for 1-2 years or whatever is in the contract.

2. But read the last page. Court says American anesthesiology has failed to prove damages. This is where is will get complicated for American anesthesiology. They can provr he's stealing patients because of the nature of anesthesiology doesn't recruit its own patients.

The 2nd part you mention about "proving damages" is only referenced under "injunctive relief", not that they couldn't or wouldn't win in a trial about the damages.

 

[deleted126335]

It may take years. But eventually these non competes will all be ruled invalid there are no intellectual property being secretly compromised if one doc goes to another practice. (Referencing practices that don't have their own patients)

Disagree. They have been around for decades. In the three different areas in different states where I worked, they were completely enforceable. I realize that there are regions where they are not enforceable no matter how they are crafted.

 

[aneftp]

Disagree. They have been around for decades. In the three different areas in different states where I worked, they were completely enforceable. I realize that there are regions where they are not enforceable no matter how they are crafted.

We are in a different court era. A lot of discrimination lawsuits in all areas being successfully pushed through.

While there isn't any doubt breach of contract on part of the doctor with mednax. Where mednax may get hosed is their random enforcement of non compete clause. We are in the equality phase of the courts these days. If mednax did not go after employee 1 or 2 who knowingly violate the non compete 30 mile radius. Than why is mednax going after employee 3. Of course this is a complicated case as with all non compete disputes since this certain doctor received monetary gain from selling out part of his practice to mednax in late 2012.

I have colleagues who have worked for mednax as employees (never former partners) and mednax has turned the other way when they got jobs within the 30 miles radius. But the few former partners who left mednax after selling out. Those former partners have followed the non compete radius and time frame to a tee.

My hunch is because this doc was a former partner who sold out that's why mednax is going after him.

 

[Carbocation1]

How will this ruling affect the job market/salaries for the new attending anesthesiologist circa 2022?

 

[GasDoc789]

Yes, at the beginning, it does say Dr. N and "his partners" sold the practice to AAM. They are going after someone who took the money and didn't work enough years after most likely. However the amount and terms (years later he had to work) are not discussed here.

 

[GasDoc789]

Anyone else other than aneftp know former mednax employees who worked within 30 miles and were not hassled in this manner?

 

[BLADEMDA]

Yes, at the beginning, it does say Dr. N and "his partners" sold the practice to AAM. They are going after someone who took the money and didn't work enough years after most likely. However the amount and terms (years later he had to work) are not discussed here.

The structure of the buyout isn't clear. Most of the time the AMC can't sue for the "money back" because legally the deal isn't based on salary or future income but rather either a stock purchase or goodwill of the practice.

The non compete clause may result in some financial damages to the plaintiff and likely $100,000 in legal bills. Even if the plaintiff wins he will still have the legal bills from his lawyer. The AMC has made their point that if you violate the non compete be prepared for an expensive legal battle.

 

[deleted50478]

I truly hope the partners of this group walked away with a ton of cash because they sold out one of the best private practices in the state to a damn AMC with BS non compete clauses like this one.

I hope they walked into oncoming traffic.

 

[Ignatius J]

I wonder if exclusive contracts will be attacked soon. Some groups essentially have monopolies in big cities. It's not hard to find a med school buddy who is doing cases at X hospital and say "Hey, want to do some cases together?"

 

[Ignatius J]

The structure of the buyout isn't clear. Most of the time the AMC can't sue for the "money back" because legally the deal isn't based on salary or future income but rather either a stock purchase or goodwill of the practice.

The non compete clause may result in some financial damages to the plaintiff and likely $100,000 in legal bills. Even if the plaintiff wins he will still have the legal bills from his lawyer. The AMC has made their point that if you violate the non compete be prepared for an expensive legal battle.

No matter. A precedent in favor of the plaintiff in this case is a big deal.

 

[aneftp]

The structure of the buyout isn't clear. Most of the time the AMC can't sue for the "money back" because legally the deal isn't based on salary or future income but rather either a stock purchase or goodwill of the practice.

The non compete clause may result in some financial damages to the plaintiff and likely $100,000 in legal bills. Even if the plaintiff wins he will still have the legal bills from his lawyer. The AMC has made their point that if you violate the non compete be prepared for an expensive legal battle.

We will see about that.

The tricky thing in civil courts is the loser can and sometimes forced to pay for other attorney costs.

It's runs both ways.

Meaning if mednax ends up losing the "small guy/doc" can ask the courts to reimburse his attorney costs.

Of course mednax can ask for the same if they win.

Does mednax want to go through a pro tracted court case and have dirty laudry aired out in public civil court case.

In this day and age of health care expenses/ACA. Does mednax want dirty laudry that they collect 30% more from private insurance aired out in public? Some liberal msnbc can be easily contacted with this case and mednax looks not only bad to prevent doc from working. Mednax looks bad for driving health insurance cost by costing insurance companies more money by demanding more.

 

[GasDoc789]

No matter. A precedent in favor of the plaintiff in this case is a big deal.

Remember, the plaintiff in this case is Mednax, not the individual Doc. A precedent in favor of the little guy (local Michigan Doc) is a big deal.

 

[BLADEMDA]

Remember, the plaintiff in this case is Mednax, not the individual Doc. A precedent in favor of the little guy (local Michigan Doc) is a big deal.

The physician clearly breached his contract with mednax. Whether mednax can prove financial harm due to the breach is another matter. But, I don't see a judge making mednax pay the physician's legal costs because the breach is quite clear.

Remember, even a verdict for just $20,000 may also result in the cost for mednax's legal fees which could total over $150,000. This is high stakes poker and my advice is not to gamble.

 

[BLADEMDA]

Contractual Provisions
One of the more common situations where a losing side is required to pay the other side's attorneys' fees occurs when the two sides signed a contract that requires the losing side in a legal dispute to pay the winning side's attorneys' fees. This usually occurs in a business context where the parties have specifically included an attorney fee requirement in a contract. However, a requirement like this is not always enforced even when parties have signed a contract including it. Courts are allowed to judge contracts for fairness and to change their terms if they decide that doing so is the more fair solution. If a judge decides that it would be unfair to enforce a requirement that one side pay the other's attorneys' fees or that one of the parties was forced into signing the agreement, the judge could cancel the requirement or change the amount of fees to be paid. But if a judge decides that a requirement to pay attorneys' fees is reasonable and that it was negotiated by two parties with equal bargaining power, then the judge will likely allow the fee provision to remain.

 

[aneftp]

The physician clearly breached his contract with mednax. Whether mednax can prove financial harm due to the breach is another matter. But, I don't see a judge making mednax pay the physician's legal costs because the breach is quite clear.

Remember, even a verdict for just $20,000 may also result in the cost for mednax's legal fees which could total over $150,000. This is high stakes poker and my advice is not to gamble.

Yes high stakes poker game.

Except mednax has shareholders to account for.

The doc are easily air dirty laundry about mednax


Get one of the major new stations reporting on mednax charging much higher than other players can have a negative effect on their "shareholder value" quickly. Like if congress demands mednax leaders to testify for their billing practices. Private insurers will throw mednax under the bus and mednax would lost millions in stock price value.

Just sayin.

 

[projectpat]

Yes high stakes poker game.

Except mednax has shareholders to account for.

The doc are easily air dirty laundry about mednax


Get one of the major new stations reporting on mednax charging much higher than other players can have a negative effect on their "shareholder value" quickly. Like if congress demands mednax leaders to testify for their billing practices. Private insurers will throw mednax under the bus and mednax would lost millions in stock price value.

Just sayin.

Could you elaborate on these billing practices?

Could the doc face repercussions for blowin' the whistle?

 

[BLADEMDA]

Could you elaborate on these billing practices?

Could the doc face repercussions for blowin' the whistle?

1. Perfectly Legal and well known in this industry
2. No. There is no whistle to blow here. And I doubt the Physician has access to the actual billing rates or contracts for these rates.

 

[BLADEMDA]

Yes high stakes poker game.

Except mednax has shareholders to account for.

The doc are easily air dirty laundry about mednax


Get one of the major new stations reporting on mednax charging much higher than other players can have a negative effect on their "shareholder value" quickly. Like if congress demands mednax leaders to testify for their billing practices. Private insurers will throw mednax under the bus and mednax would lost millions in stock price value.

Just sayin.

The judge must allow the defendant to use Mednax's billing rates as a reasonable defense for why he knowingly violated the non compete clause; I don't see the billing rates as relevant here in this case. The departure of the Physician had nothing to do with billing rates but instead his desire to earn more money and do less work without having to relocate to another city or State.

 

[Man o War]

I hope they walked into oncoming traffic.

Yes, then there is that. I'm trying to decide who I dislike more in this scenario. The doc who participated in selling this practice out, or the AMC set up that I loathe. It's a tough call.

 

[Man o War]

It's tough to feel sorry for this doc knowing he collected a 6 or 7 figure pay day and then didn't want to play by the rules he knew were in place when he took the money and ran, even though that non compete is ridiculous.

 

[deleted126335]

Using the threat of a trial in open court to air dirty laundry or confidential, proprietary information that would damage the other side in a lawsuit to force a settlement or discourage the suit is an old trick. It sometimes even works. But often the judges will disallow or heavily edit requests for discovery based on his/her individual discretion regarding its probative value. Anybody who wants to fight these corporations better be prepared to write a six figure check for legal expenses and risk writing a bigger check if they lose, and a multi year battle.

probative value
n. evidence which is sufficiently useful to prove something important in a trial. However, probative value of proposed evidence must be weighed against prejudice in the minds of jurors toward the opposing party.

 

[aneftp]

The judge must allow the defendant to use Mednax's billing rates as a reasonable defense for why he knowingly violated the non compete clause; I don't see the billing rates as relevant here in this case. The departure of the Physician had nothing to do with billing rates but instead his desire to earn more money and do less work without having to relocate to another city or State.

In civil cases what's admissible vs what's not admissible doesn't matter as much as the smear campaign. Mednax has a lot more to lose if the doc contacts the media.

Again just imagine congress calling mednax executives to explain their billing practices. They are in a no win situation cause they are responsible for increasing health care costs. Congress would have a field day discuss something leaked that we all know about and that has nothing to do with this civil lawsuit.

 

[Mman]

In civil cases what's admissible vs what's not admissible doesn't matter as much as the smear campaign. Mednax has a lot more to lose if the doc contacts the media.

Again just imagine congress calling mednax executives to explain their billing practices. They are in a no win situation cause they are responsible for increasing health care costs. Congress would have a field day discuss something leaked that we all know about and that has nothing to do with this civil lawsuit.

I'm sorry, but what "billing practice" are you referring to? The practice of negotiating a rate for a service? Because every private practice doc in the country is guilty of the same thing and every academic department does it as well.

Is it only OK if you are the lowest paid doc in your specialty? Anybody at any higher rate supposed to feel guilty?

 

[aneftp]

I'm sorry, but what "billing practice" are you referring to? The practice of negotiating a rate for a service? Because every private practice doc in the country is guilty of the same thing and every academic department does it as well.

Is it only OK if you are the lowest paid doc in your specialty? Anybody at any higher rate supposed to feel guilty?

No. I am saying does mednax want to be exposed in a civil law suit.

Lots of dirty laudry can be aired out in civil lawsuits.

Mednax is one of the biggest billers in anesthesia. I am just saying u can have x doc lawyers talk to msnbc saying "yeah we got this civil lawsuit going on"

"While the crux is non compete".

But "barely mention non compete, we got the real story, how mednax bills 30% more from private insurers raising cost of health care for joe public struggling to pay his health premiums"

Bam. You got a news story. Bam. U got congressional hearings on billing practices of large firms raising cost of health care.

 

[Mman]

But "barely mention non compete, we got the real story, how mednax bills 30% more from private insurers raising cost of health care for joe public struggling to pay his health premiums"

Bam. You got a news story. Bam. U got congressional hearings on billing practices of large firms raising cost of health care.

If that's your news story, they certainly don't need a lawsuit to raise it. You can figure out their rates from any patient bill they send out.

 

[GasDoc789]

http://courts.mi.gov/opinions_orders/businesscourtssearch/BusinessCourtDocuments/C06-2015-147134-CK (Jun 15, 2015).pdf

If you work for American Anesthesiology and you want a better deal in a neighboring town within 30 miles, you probably violate your non-compete. However, in anesthesiology typically an OR based anesthesiologist does not take patients, business, or goodwill to another job. There is now a precedent set in Michigan that this contract is unenforceable for OR based anesthesiologists. This case above represents American Anesthesiology of Michigan threatening arbitration and litigation to a doctor who found a job in the same city. Within 1 month of the doc leaving, the court was able to DENY American Anesthesiology's request for injunction. This allowed the doc to work where he wanted.

I think this is a big victory for all physicians under this contract. I would love to hear of any other situations throughout the United States.

In follow up to this case, American Anesthesiology tried again to place the temporary injection against the anesthesiologist and LOST AGAIN!!

http://courts.mi.gov/opinions_order...06-2015-147134-CK (March 3, 2016).pdf#search=""

 

[deleted171991]

An AMC is highly incentivized to make an example out of such an anesthesiologist. So he'd better be prepared to spend a lot of money.

If they don't fight him tooth and nail, it can be interpreted as acknowledging that their non-compete has no basis, which is a bad precedent for suing other former employees in the future.

 

[deleted682700]

Don't be so sure about that.

Read the opinion closely. Two things have to happen.

1. Court says he's likely in breach of contract (that's obvious cause he's within the 30 mile radius) and also not saying away for 1-2 years or whatever is in the contract.

2. But read the last page. Court says American anesthesiology has failed to prove damages. This is where is will get complicated for American anesthesiology. They can provr he's stealing patients because of the nature of anesthesiology doesn't recruit its own patients.


They could try to argue "recruitment fees" damages to replace outgoing doc (say $20-40k) typical head hunter fee.

Considering it's a big city and the demand/supply of anesthesiology in 2015. I'd wager on the lower of the 20k "recruitment fee".

In the end mednax with its unlimited legal resources may try to continue the legal case in hopes this doc runs out of money. They don't want to setup a precedent to have docs leaving at will and ignoring non competes.

Different states have different laws.

But I am glad this doc challenged mednax non compete. Because courts usually refer to other legal rulings as guideline. And the more cases the better.

How is this in california?
Why should the outgoing physiciam assume the damage to recruitment fee if no sign on bonus or moving expense was ever paid?

 

[deleted682700]

No. I am saying does mednax want to be exposed in a civil law suit.

Lots of dirty laudry can be aired out in civil lawsuits.

Mednax is one of the biggest billers in anesthesia. I am just saying u can have x doc lawyers talk to msnbc saying "yeah we got this civil lawsuit going on"

"While the crux is non compete".

But "barely mention non compete, we got the real story, how mednax bills 30% more from private insurers raising cost of health care for joe public struggling to pay his health premiums"

Bam. You got a news story. Bam. U got congressional hearings on billing practices of large firms raising cost of health care.

Wish what you are saying comes true. However these companies effectively lobby politicians to keep the scam going until everyone gets tired