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American Academy of Emergency Medicine

Wisconsin Doctors Challenge Noncompete Clause

Source: AMNews, October 2, 2000

Three doctors in a small town in central Wisconsin are challenging the legality of a noncompete clause in a contract that requires them to practice 25 miles away for 18 months before practicing again in the town.

Their lawsuit, scheduled to go to trial in January 2001, highlights both the contractual restrictions that physicians need to be aware of when moving to another medical group as well as the issue of whether noncompete clauses disrupt patient care.

"This is clearly not a money issue. The issue is one of the long-term well-being of our hospital and health care in our community," said Donn Fuhrmann, MD, a family physician and one of the three doctors who left a four-doctor clinic in New London, Wis. (population 6,600). The clinic is affiliated with Menasha, Wis.-based Affinity Health System.

Affinity's chief medical officer Scott Nygaard, MD, said that "noncompete clauses are widely accepted in the industry, and we won't change our position on it. We respect the fact that they entered into a contract and we just request that the contract is honored."

Dr. Fuhrmann said the three doctors decided to move from Affinity to a ThedaCare clinic in New London.

Affinity, meanwhile, was sending most of its patients from Affinity Health Group to its hospitals in Appleton, 20 miles away, instead of to the New London Medical Center, although Affinity still has a contract with the medical center.

A key issue: A health care lawyer who specializes in medical group issues said the issue of noncompete clauses is "one of the biggest issues" physicians face when switching medical groups.

The legal enforceability of such clauses varies from state to state, said lawyer Tim McDowell, a partner in the McDowell Law Group in Atlanta. He wasn't sure of the track record of such cases in Wisconsin.

"The analysis usually involves a number of things, such as the reasonableness of the territory and time limit," said McDowell. Some state courts side with the medical group's position that "if a doctor leaves and goes across the street, that undercuts the whole business practice."

In other states, however, courts side with the argument of physicians that noncompete clauses are "a disruption of patient care. That policy argument becomes stronger in rural, underserved areas," McDowell said.

Dr. Fuhrmann said the case underscores the upheaval that managed care has caused in health care. "I never imagined that health care would become so politically and economically turbulent in our small town."

Dr. Fuhrmann said he and his colleagues, Joseph Lamb, MD, and Timothy Houlihan, MD, also family physicians, were aware of the noncompete clause, but never thought they would leave Affinity, where they had practiced for several years.

The doctors approached ThedaCare and were offered positions with the group. They then told Affinity on June 13 they would be leaving. At the time, Dr. Fuhrmann said, they did not plan to challenge the noncompete clause because they had found temporary work at a walk-in Aurora Medical Group clinic in Oshkosh, Wis., about 30 miles from New London.

However, said Dr. Fuhrmann, the three decided to file a lawsuit challenging the noncompete clause in response to "a huge outcry from the community. There were very few physicians available to do deliveries [which the three doctors did as part of their practice]. There were also some concerns about the noncompete clause being too broad and too long. We felt it was in our patients' best interests to follow through," he added.

The physicians filed for a temporary injunction to restrain Affinity from enforcing the noncompete clause, but withdrew that injunction at the end of August. Dr. Fuhrmann declined to elaborate on why the petition for the injunction was dropped but said the case was scheduled to go to trial in January 2001. Dr. Nygaard said that Affinity had replaced the three doctors and even added a few more to the clinic. "So now there are more physicians practicing in New London. The issue of the community going unserved is a weak position."

Dr. Fuhrmann said he hoped an out-of-court settlement still could be reached before the trial, but Dr. Nygaard said he was "not optimistic" about that chance.