The Rhode Island Superior Court recently refused to enforce a non-compete agreement against a local physician because it was against the public interest. Medicine and Long Term Care Associates, LLC v. Khurshid, PC 2015-0458, 2016 WL 1294194 (R.I. Super. Ct. Mar. 29, 2016) (Silverstein, J.). Prior posts on It’s Your Business have summarized the law governing non-competes. Is The Classification Of Your Workers Putting Your Business At Risk? and Distinguishing Between Types Of Non-Compete Provisions In Rhode Island
A local provider of health care services recently sought to enjoin its former employee pursuant to a non-compete provision in an employment agreement entered into by the parties. The health care provider contracted with various nursing homes to treat geriatric patients. The physician/employee treated geriatric patients on behalf of the local provider at one particular nursing home. That physician then left his employment to work directly for that nursing home, contemporaneously with that nursing home ceasing to do business with the health care provider. The non-compete provision signed by the physician seemed to prohibit the physician from usurping this business relationship, and another provision in the agreement expressly stated that injunctive relief was an appropriate remedy in the event of a violation of the non-compete.
Unlike other states, including Massachusetts, Rhode Island has no statute that prohibits or limits the enforcement of non-competes against individual medical professionals. However, the Superior Court judge found a “strong public interest in allowing individuals to retain health care service providers of [his or her] choice,” notwithstanding the absence of any specific Rhode Island law demonstrating that public interest. Khurshid, 2016 WL 1294194, at *3. In doing so, the Superior Court distinguished another Superior Court decision enforcing a non-compete against veterinarians. Id. at 2 (quoting Block v. Vector, 2000 WL 1634784, at *6 (R.I. Super. Ct. May 19, 2000) (“finding that enforcement would not impose ‘an undue hardship on the pets in Rhode Island’”)). While the Court refused to enjoin the physician from working for the nursing home, it emphasized that the former employer could still seek money damages in relation to the physician’s breach of the non-compete provision.
This appears to be the first Rhode Island decision refusing to enjoin a violation of a non-compete provision against a medical professional due to the relevant public interest. The notion that a non-compete provision can be unenforceable as inconsistent with the public interest, but also can give rise to a claim for money damages, also appears to be a novel one under Rhode Island law. Whether you are an employer or an employee in the health care field, Khurshid has the potential to affect you and your rights under your employment agreement(s). Careful consideration of these issues – either at the time of drafting, or at the time of enforcement – can still result in you getting a clean bill of health in relation to your non-compete agreements.