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Wednesday
Dec142005

Doctor Sues St. John's To Open Medical Spa

Former St. John's physician claims a noncompete pact doesn't apply.

By Kathleen O'Dell
News-Leader


A former St. John's Strafford Clinic physician is suing the clinic for preventing him from simultaneously opening a medical spa in Springfield. The lawsuit, filed last week in Greene County Circuit Court, is the most recent legal challenge to noncompete agreements that bind area physicians to their health care employers.

St. John's has 30 days to file its response.

Family practice physician John L. Abraham left St. John's Clinic Nov. 30 and is an urgent care physician at Freeman Hospital in Joplin. He must work outside a 25-mile radius of St. John's for two years, in keeping with the noncompete agreement he is challenging. He has not yet opened a medical spa.

Abraham wanted to continue working for St. John's at the Strafford clinic while opening a medical spa in Springfield as a private investment, the lawsuit says.

He planned to hire staff to perform most of the spa treatments, which would include microderm facial peels and laser hair and spider vein removal. He expected to perform any procedures himself that required a medical license, such as Botox injections.

But St. John's officials said the doctor's plan violates the employment contract he signed when he joined St. John's Clinic in March 2003.

Specifically, they say it violates a noncompete covenant in which Abraham agreed not to practice medicine that competed with St. John's while he was an employee, and not within a 25-mile radius of Springfield and Stafford for two years after leaving the clinic.

St. John's officials say Abraham planned to invest in a venture that competed directly with his employer, and any medical service he performed at his spa would compete with other St. John's physicians — all violations of his non-compete agreement.

Abraham argues in the lawsuit that the employment agreement applies only to his primary care practice. His noncompete agreement is not valid as it concerns the proposed spa because he never performed spa services for St. John's, and he would not solicit clients from his Strafford clinic, his suit states.

Therefore, his non-compete does not protect either trade secrets or customer contacts of St. John's — the only legally recognized reasons for upholding noncompete covenants.

"... St. John's only application of the covenant not to compete is to protect St. John's and its physicians ... from the future competition of Dr. Abraham," the suit states.

The lawsuit points out that St. John's Clinic — Plastic and Reconstructive Surgery's Medical spa in Springfield — is run by other physicians including Dr. Walter Gaska, president of St. John's Clinic.

St. John's general counsel Michael Merrigan said Monday the term "practice of medicine" in employment agreements does not provide for a variety of exceptions under different case scenarios.

"Any exception to those noncompetes (is) determined by the clinic board, and they do it on a case-by-case basis," Merrigan said. The board denied Abraham's request for an exception.

Abraham could open a spa in Springfield tomorrow as long as he did not perform any medical services there — due to his noncompete agreement, Merrigan said. But he could not own the spa and still work at St. John's, he added.

Merrigan said in an April 2005 letter to an attorney that physician investments allowed in their employment contracts exclude investments that compete against services provided by the clinic.

"If this clause were to be read as broadly as you wish it to be construed, then it would be your position that any St. John's Clinic physician who would want to invest in a competing hospital, clinic and/or ambulatory surgical center here in Springfield would be permitted to do so ...," Merrigan's letter says.

Abraham said he's fighting a bigger issue than his own desire to operate a spa in Springfield.

"St. John's makes the same blank prohibition for all physicians who voluntarily leave St. John's, forcing doctors to leave town and practice in other communities if they decide not to be a part of St. John's," he said.

"This in turn gives patients less choices," he added. "St. John's is punishing physicians for exercising their right to work for whom they choose to work for."

The people most affected are those patients who must leave a physician they like and trust, and find a new one, Abraham said.

Merrigan disagrees that noncompetes hurt the community. St. John's Clinic continued to recruit 40 to 50 physicians this year, it had no break in services with any specialty or family physicians, and St. John's Clinic is seeing a record number of patients while placing at the top in patient satisfaction surveys of large medical groups.

St. John's noncompete agreements are similar to those used by CoxHealth and Ferrell-Duncan Clinic in Springfield, as well as health systems across the country.

While some courts uphold this common business practice, other courts have declared them invalid, citing vague wording and restraint of trade, legal experts say.

Abraham is not sure his case will prompt drastic change, he said, "But these noncompete issues keep coming up, and I think it's just the baby steps we need to take to get the end result."

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