Carter-Shields v. Alton Health Institute

739 N.E.2d 569, 250 Ill. Dec. 806, 317 Ill. App. 3d 260
Appellate Court of Illinois·Decided November 3, 2000·No. 5-99-0359·Published·Cited by 15 cases

Opinion

PRESIDING JUSTICE GOLDENHERSH

delivered the opinion of the court:

Vera E. Carter-Shields, M.D. (plaintiff), filed a declaratory judgment action against Alton Health Institute (AHI), seeking to have her employment contract, referred to by the parties as a physician service agreement (agreement), with AHI declared invalid. After AHI allegedly assigned all of its physician service agreements, including plaintiffs agreement, to Community Primary Care Physicians (CPCP), that entity intervened and is also a defendant herein. AHI and CPCP (defendants) filed a counterclaim for breach of the agreement, seeking injunctive relief and monetary damages. The trial court denied plaintiffs request for declaratory relief, granted a partial summary judgment in favor of defendants on the issues of breach of contract and injunctive relief, and enjoined plaintiff from practicing medicine for a period of two years within 20 miles of AHI’s office, pursuant to a restrictive covenant contained in the agreement. Thereafter, on the motion of plaintiff, the trial court modified its partial summary judgment order, interpreting the 20-mile radius described in the restrictive covenant as driving distance instead of a straight line on the map. Plaintiff appeals the trial court’s entry of the partial summary judgment, arguing as follows: (1) the agreement is void and unenforceable, (2) AHI has no legal and protectable interest in preventing plaintiff from engaging in the private practice of medicine, (3) the agreement between AHI and plaintiff was unassignable, (4) the trial court erred in finding the restrictive covenant valid and enforceable, (5) the trial court erred in granting defendants’ motion for a partial summary judgment on the factual issue of breach of contract, and (6) the enforcement of the restrictive covenant prevents plaintiff from fulfilling her ethical and professional obligations to her patients and is, therefore, void as a matter of public policy. Defendants cross-appeal based on the court’s modifications of the restrictive covenant. We reverse.

FACTS

Plaintiff is a board-certified family-practice physician licensed to practice medicine in Illinois. Plaintiff graduated from Tulane School of Medicine in New Orleans, Louisiana, in 1982, and she completed her internship and residency with the Army. Plaintiff continued to practice medicine with the Army until March 1995. AHI is a not-for-profit corporation organized and existing under the Illinois General Not for Profit Corporation Act of 1986 (805 ILCS 105/101.01 et seq. (West 1996)). St. Anthony’s Health Systems, a not-for-profit, tax-exempt corporation wholly owned by the Sisters of St. Francis of the Martyr St. George, owns 50% of AHI stock. The other 50% is owned by Alton Health Care Partnership (Partnership). The Partnership is an entity of physician groups, mainly, but it also includes a nonphysician (a physical therapist). The Partnership does not have tax-exempt status. The president of AHI is William Kessler. Mr. Kessler is also the president of St. Anthony’s Health Systems. Mr. Kessler is not a physician, nor does he hold a medical license.

On January 4, 1995, plaintiff and AHI entered into the agreement in question, which became effective April 1, 1995, the first day plaintiff worked for AHI. Under the contract, plaintiff was compensated at an annual rate of $127,000 in 1995. In 1996, plaintiffs compensation was adjusted to $127,000 plus the percentage increase in the consumer price index. In 1997, and thereafter, plaintiffs compensation was to be decided by a compensation committee. Committee members were to consider numerous factors in making a determination, including compensation in previous years, market compensation levels, AHI’s performance, and the status of health care reform. Bonuses were also available to plaintiff throughout the term of her contract. AHI was to provide plaintiff with, inter alia, office space, equipment, furnishings, supplies, and personnel, both medical and nonmedical, to operate the office.

The agreement was for an initial term of three years and was automatically renewable, unless otherwise terminated. The agreement gave AHI the right to terminate for cause upon the occurrence of certain events outlined in the agreement and gave both parties the right to terminate, with notice, for a failure of the other party to cure a material breach. The agreement also included the following two-year, 20-mile radius, noncompetition provision:

“5.2 Non-Competition Covenant. During the term of this Agreement and for a period of two (2) years from the date this Agreement is terminated for any reason (the ‘Protected Period’), Physician agrees that he or she will not, without the prior written consent of [AHI], directly or indirectly (i) provide! ] or become associated with any other hospital group or other entity of any type engaged in the provision of medical or health care services or related administrative services within the medical practice area, which for purposes of this Agreement is the area within a twenty (20) mile radius of the Office; (ii) solicit, divert, take away, interfere with, or contract to provide or render medical services to patients treated by Physician during the term of this Agreement; or (ii) [sic] solicit any person who is now or is hereafter an employee of [AHI] or is now or hereafter engaged as an independent contractor of [AHI] to become an employee or to be engaged as an independent contractor of a hospital medical group or any other entity that is competitive with [AHI] (collectively the ‘Non-Competition Covenant’).” (Emphasis omitted.)

Plaintiff’s relationship with AHI was strained almost from the outset. For example, on October 6, 1995, plaintiff sent the president of AHI a five-page letter detailing her complaints about working conditions with AHI and problems that had arisen from the time she signed the agreement. On July 15, 1996, plaintiffs attorney wrote a letter to the attorney for AHI in an attempt to work out a separation agreement and to modify the noncompetition clause to describe an area “exceedingly close” to plaintiff’s AHI office. The issues were never resolved to the parties’ satisfaction.

On January 1, 1997, AHI assigned all of its physician service agreements, including the instant agreement, to the other defendant herein, CPCI] an Illinois medical services corporation organized as a limited partnership. CPCP is owned by George L. Tucker, a licensed medical doctor. Plaintiff did not sign a new contract with CPCP, but she continued to work under the original agreement between plaintiff and AHI. On January 31, 1997, plaintiff initiated litigation by filing a declaratory judgment action against AHI, seeking to have the agreement declared invalid. The litigation was not actively pursued while the parties waited for our supreme court’s decision in Berlin v. Sarah Bush Lincoln Health Center, 179 Ill. 2d 1, 688 N.E.2d 106 (1997), which considered whether the corporate-practice-of-medicine doctrine prohibits a hospital from employing physicians to provide medical services.

On April 3, 1997, plaintiffs attorney sent a letter to Mr. Kessler and the board of directors of AHI with the express purpose of providing notice of plaintiffs intent to terminate the agreement for alleged ongoing material breaches.

Free access — add to your briefcase to read the full text and ask questions with AI

Carter-Shields v. Alton Health Institute, 739 N.E.2d 569, 250 Ill. Dec. 806, 317 Ill. App. 3d 260 (Ill. Ct. App. 2000).

739 N.E.2d 569 (Carter-Shields v. Alton Health Institute) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

Related

Reliable Fire Equipment Co. v. Arredondo
2011 IL 111871 (Illinois Supreme Court, 2011)
Sunbelt Rentals, Inc. v. Ehlers
915 N.E.2d 862 (Appellate Court of Illinois, 2009)
Lifetec v. Edwards
Appellate Court of Illinois, 2007
Lifetec, Inc. v. Edwards
880 N.E.2d 188 (Appellate Court of Illinois, 2007)
Mohanty, M.D. St. John Heart Clinic
Illinois Supreme Court, 2006
Mohanty v. St. John Heart Clinic, S.C.
866 N.E.2d 85 (Illinois Supreme Court, 2006)
Mohanty v. St. John Heart Clinic, S.C.
832 N.E.2d 940 (Appellate Court of Illinois, 2005)
Mohanty v. St. John Heart Clinic
Appellate Court of Illinois, 2005
Carter-Shields, MD v. Alton Health Inst.
777 N.E.2d 948 (Illinois Supreme Court, 2002)
Carter-Shields v. Alton Health Institute
Illinois Supreme Court, 2002
Prairie Eye Center, Ltd. v. Butler
768 N.E.2d 414 (Appellate Court of Illinois, 2002)