Mohanty v. St. John Heart Clinic

Slip Opinions dated Dec. 21, 2006

Contracts – health care provider restrictive covenants
The plaintiffs argued that they should not be held to the terms of their restrictive covenant in their contracts because defendants materially breached the employment contracts by improperly billing for a certain medical procedure. Because the case was before the court on an interlocutory order from a TRO, the appellate court refused to review plaintiffs’ claim of material breach, and stated the plaintiffs must wait for a hearing on the merits to determine if the defendants breached the employment contract in a material way. The Supreme Court addressed the issue of material breach because its determination could render the restrictive covenants unenforceable.

The determination of whether a material breach of contract has been committed is a question of fact. Evidence was presented on how the specific test alleged to have been inappropriately billed should have been billed. Based on that evidence, it was not against the manifest weight of the evidence for the trial court to determine a material breach of the contract was not established.

The plaintiffs also argued that the restrictive covenants were unreasonable because they caused undue hardship to plaintiffs, were injurious to the public, and were excessive in temporal scope. Here the practice was located in Chicago, the restrictive covenants were for 3 and 5 years, and the location was limited by 2 and 5 miles. Further the measure of the potential harm to the public caused by the restriction is whether there exists a sufficient number of cardiologists in the area to meet patient needs, which was not contested by defendants. The court found that the time and geographical limits involved would seriously diminish the number of cardiologist to provide the necessary patient care, and were therefore deemed reasonable and necessary to protect the Clinic’s interests.

Finally, the plaintiffs urged that court to hold all restrictive covenants in physician contracts void as against public policy in Illinois. The plaintiffs urged the court to treat restrictive covenants for physicians the same as that of attorneys, and cited an AMA provision which discouraged such covenants in contracts. The court said that while the AMA Opinions was informative it was not the equivalent of an Illinois statute or rule of professional conduct, and therefore does not provide a clear expression of the public policy of this state.

** Justice Garman concurrence could be persuasive for future arguments by doctors.