Judge Upholds Florida State Statute Voiding Specific Employee Non-Compete Agreements
When five out of nine oncologists employed by 21st Century Oncology Inc. left the company to start their own practices, the company cited a violation of the non-compete clause of their employment contracts.
Rather than directly pursuing the five physicians, the plaintiff, 21st Century Oncology Inc., sought an injunction against the state’s attorney: Ashley Moody.
The reason for this action by the plaintiff is section 542.336, Florida Statute, which the Florida Legislature adopted in 2019. The statute holds that if a singular entity holds a monopoly on a specific type of care in the region, the non-competes of that entity’s employees are essentially null and void.
Investigations led by the attorney general’s office concluded several large cancer care providers in the state conspired to limit competition for services, creating a monopoly, which led to an increase in the cost of care. Subsequent investigations led by the attorney general’s office concluded several large cancer care providers in the state conspired to limit competition for services, creating a monopoly, which led to an increase in the cost of care
The Florida state legislature enacted statute 542.336 to prevent non competes that it deemed “restrict patient access to physicians, increase costs, and are void and unenforceable under current law.”
This was not the first case of legal trouble for 21st Century Oncology Inc. In 2015, it was ordered to pay a 2.3 million dollar fine for a privacy breach of patient records. Then, in 2018, it was fined again, this time over improper medical referrals. The latter resulted in a 26 million dollar fine.
Judge Walker Finds No Swamp Monster
Chief District Judge Mark. E Walker’s opinion denying the plaintiff’s injunction opens with a colorful narrative-driven metaphor in which 21st Century Oncology Inc. describes statute 542.336 as the swamp monster from the classic film, Creature From the Black Lagoon.
The plaintiff alleges statute 542.336 is “pernicious special-interest legislation” aimed at protecting the small group of physicians against the interests of the common good.
The plaintiff argued for the ambiguity of the “medical specialties” the statute affects, as well as the difficulty in ascertaining whether it employed every care provider in the region for that particular specialty.
Judge Walker was not persuaded by the plaintiff’s arguments.
“While the Constitution prohibits the States from passing ‘any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts,'” this mandate is “not an absolute bar to legislation that affects contracts.
Instead, the Constitution “recognizes that contracts reflect parties’ expectations about the future, and at times it may be necessary for a government to subordinate those expectations to the needs of the public’s health, safety, and welfare.
In other words, contrary to 21st Century Oncology Inc.’s claims, Judge Walker found statute 542.336 to be necessary to protect the health and welfare of Southwest Florida cancer patients who would otherwise be faced with increased care costs due to a monopoly of special healthcare services–specifically: cancer treatment.
“Plaintiff claims section 542.336 is intended to serve the private benefit of a small special interest group rather than any legitimate public purpose, this Court concludes the record at this stage of proceedings does not support that contention.”
Walker upheld the notion that access to affordable healthcare is a legitimate state interest, and that statute 542.336 is in the public’s interest, not the monstrous creation of special interest groups and lobbyists as the plaintiff contends.
The plaintiff also argued that there was no way to prove that voiding non competes of former employees would result in reduced healthcare costs for patients.
On both sides of the argument, witnesses presented conflicting opinions on whether voiding non-compete agreements would lead to decreased costs for cancer patients. Witness Dr. Argue stated that if the plaintiff’s cost of care for cancer patients was, in fact, too high, “increasing competition could lead to lower prices for patients.”
Because this testimony was inconclusive, Walker asserted the legislature was justified in voiding employee non-compete clauses in an attempt to reduce patient care costs.
Navigating Florida’s Tricky Legal Waters in the Healthcare Industry
Statute 542.336 is just one example of the often confusing and complex world of healthcare legislation. If you own a practice in Miami and find yourself in need of a litigation or healthcare fraud lawyer, get in touch with our team at Tache Bronis. Call 305-537-9565.
Disclaimer: The information in this blog post (“post”) is provided for general informational purposes only, and may not reflect the current law in your jurisdiction. No information contained in this post should be construed as legal advice from the individual author or the law firm, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.
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