New York Trial Court Refuses to Enforce Physician Restrictive Covenant

07.06.2016

It has long been the law in New York that employment contract covenants restricting what employees can do post-employment, generally difficult to enforce, are much easier to enforce against physicians. However, a New York trial court in Suffolk County recently refused to enforce a restrictive covenant against a physician, finding the covenant unreasonable in the circumstances.

The Court utilized the standard New York test for enforcement of restrictive covenants: reasonable as to time and area, necessary to protect a legitimate purpose, not harmful to the public, and not unduly burdensome. The Court noted that the same practice's physician covenant had been enforced previously, but that had been against a partner while the current case was against a physician employee. It was also important to the Court that the physician employee was willing to discontinue anesthesiology, the practice's primary or sole area, and only sought to work going forward in pain management.

It is important to note that the decision was made in the beginning of the case, in the context of a preliminary injunction application and a summary judgment motion, so the outcome could be different after fact discovery is conducted. Nonetheless, these issues and arguments are coming as doctors are increasingly sub-specializing and hospital systems and medical practices are increasingly growing and using restrictive covenants. For those seeking to enforce physician (or any) restrictive covenants, careful, specific drafting by or with the assistance of experienced employment counsel is vital.