Legal Aspects Of Health Care Administration 11th Edition by George Pozgar

تمرين 8

Facts
The appellee, National Emergency Services (NES), assigned appellant, Dr. Dominy, to the emergency department at Memorial Hospital and Manor (MHM) in Bainbridge, Georgia, where he was working in 1987 when that hospital terminated its contract with NES and contracted with another provider, Coastal Emergency Services, for emergency department physicians. Dominy continued to perform emergency medical services at MHM under contract with Coastal until 1989.
The contract provided: "The period of this Agreement shall be for one (1) year from the date hereof, automatically renewable for a like period upon each expiration thereof...." The only reasonable construction of this provision was that the parties intended to contract for Dominy's employment for automatically renewable 1-year terms upon the mutual assent of the parties. The fact that the agreement did not set out the mechanics by which mutual assent may be communicated did not invalidate the contract.
Dominy challenged the contract's noncompetition clause as overly restrictive. The covenant in this case provides, in pertinent part: "for a period of two (2) years after the termination of this agreement... Physician shall not directly or indirectly solicit a contract to perform nor have any ownership or financial interest in any corporation, partnership, or other entity soliciting or contracting to perform emergency medical service for any medical institution at which Physician has performed the same or similar services under this Agreement or any prior Agreement between Physician and Corporation" [ Id. at 474].
Issue
Was the contract's noncompetition clause overly restrictive?
Holding
The court of appeals held that the noncompetition clause was not overly restrictive.
Reason
The record reveals no attempt by either party to terminate the contract, and it is undisputed that Dominy received payment for his services at MHM and other benefits from NES consistent with the agreement until the hospital terminated its contract with NES. By their conduct, the parties assented to each of the contract's yearly renewals. Accordingly, the trial court properly granted summary judgment to NES.
As to the contract's noncompetition clause, this restriction prohibits Dominy from performing emergency medical services in only MHM in Bainbridge, Georgia, where he worked pursuant to a contract with NES, and from having an ownership or financial interest in an entity contracting to provide emergency medical services to that one hospital. He is not precluded from all practice of medicine, with staff privileges at MHM, nor is he prohibited from providing emergency medical services, directly or under contract to a provider of such services, to other hospitals in the immediate vicinity. The court found that such a restriction is reasonably limited in duration and territorial effect while it protects NES's interest in preventing Dominy from becoming its competitor immediately after termination of its contract with MHM.
Discuss why hospitals place noncompetitive clauses in their contracts.