Community Hospital Group, Inc. v. More

869 A.2d 884, 183 N.J. 36, 22 I.E.R. Cas. (BNA) 1298, 2005 N.J. LEXIS 299
CourtSupreme Court of New Jersey
DecidedApril 5, 2005
StatusPublished
Cited by36 cases

This text of 869 A.2d 884 (Community Hospital Group, Inc. v. More) is published on Counsel Stack Legal Research, covering Supreme Court of New Jersey primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Community Hospital Group, Inc. v. More, 869 A.2d 884, 183 N.J. 36, 22 I.E.R. Cas. (BNA) 1298, 2005 N.J. LEXIS 299 (N.J. 2005).

Opinions

Justice WALLACE

delivered the opinion of the Court.

In this case and in the companion case of Pierson v. Medical Health Centers, P.A., 183 N.J. 65, 869 A.2d 901, 2005 WL 767001 (2005), also decided today, we granted leave to appeal to reexamine the issue decided in Karlin v. Weinberg, 77 N.J. 408, 390 A.2d 1161 (1978), that a post-employment restrictive covenant in an employment contract between physicians or between a physician and hospital is not per se unreasonable and unenforceable. Secondary to that issue, in this case, is whether, assuming Karlin has continuing vitality, the trial court erred in denying plaintiffs application for a preliminary injunction. The trial court denied relief, but the Appellate Division reversed and ordered temporary injunctive relief.

We reject the invitation to overrule Karlin. Instead, we hold that a restrictive covenant in an employment contract between a hospital and a physician is not per se unreasonable and unenforceable. We conclude, however, that under the circumstances of this ease the geographic restrictive area is excessive and must be reduced to avoid being detrimental to the public interest.

I.

Plaintiff, the Community Hospital Group, also known as John F. Kennedy Medical Center (JFK) and the New Jersey Neuroscience Institute (Institute), is a not-for-profit hospital in Edison, Middle-sex County, New Jersey. In 1992, JFK created the Institute, a [42]*42not-for-profit medical care provider specializing in the diagnosis and treatment of neurological diseases and neurosurgical conditions. The Institute receives the majority of its patients through referrals from physicians in other specialties.

On July 1,1994, Dr. Jay More began to work as a neurosurgeon at the Institute following his residency at Mt. Sinai Hospital, in New York City. The initial employment agreement was for a one-year period beginning July 1, 1994, and ending June 30, 1995. The following year, Dr. More entered into a four-year agreement effective July 1, 1995, and in 1999, a five-year agreement effective July 1, 1999. Under the terms of the 1999 agreement, either party could terminate the agreement upon three hundred and sixty-five (365) days written notice to the other party. Critical to this appeal, each of the three employment agreements contained post-employment restrictive covenants that prohibited Dr. More from engaging in certain medical practices within a thirty-mile radius of JFK for two years.1 The initial post-employment restrictive covenant contained in the 1994 agreement prohibited Dr. More from engaging in the practice of neurosurgery within a thirty-mile radius of JFK for a period of two years. The subsequent agreements were similar, but were expanded to prohibit Dr. More from engaging in any practice of medicine, not just neurosurgery.

The July 1, 1999 agreement, which was to run for a period of five years, is the contract that governs the dispute in this case. Article 7.14 of that agreement provided in part that

[43]*43for a period of one (2)[sic] years following the date of termination of MORE’s employment for any reason whatsoever, MORE shall not, directly or indirectly, own, manage, operate, control or be employed by, participate in or be connected in any manner with the ownership, management, operation or control of any medical practice, nor engage in the practice of medicine, in any of its branches, within a 30 mile radius of the HOSPITAL, providing the same or substantially the same medical care as the Services outlined in this agreement. In the event, and only in the event, that the HOSPITAL terminates this Agreement without cause, the HOSPITAL agrees to make two exceptions to this non-competitive covenant and thus permit MORE to practice neurosurgery in New York City, defined as and limited to Queens, Brooklyn, Manhattan, and the two general hospitals in Elizabeth, New Jersey. In the event that MORE terminates this Agreement without cause or either party terminates this agreement for cause, then the aforementioned exceptions do not apply.
During the term of this Agreement and for a period of two (2) years following the date of termination of MORE’s employment for any reason whatsoever, MORE shall not, directly or indirectly, for his own account or for the account of others, induce any patients of the HOSPITAL to patronize any professional health care provider other than the HOSPITAL; canvas or solicit any business relationship from any patients of the HOSPITAL; directly or indirectly request or advise any patients of the HOSPITAL to withdraw, curtail, or cancel any patients’ business with the HOSPITAL; or directly or indirectly disclose to any other person, firm or corporation the names or addresses of any patients of the HOSPITAL.

Dr. More further agreed that he would not solicit or induce any employee of JFK to leave his or her employment for a two-year period and that the post-employment restraints were reasonable. Another provision in the agreement provided that in the event of a breach, JFK would suffer irreparable harm and damage and would be entitled to injunctive relief to enforce the post-employment restraints.

JFK agreed to pay Dr. More the base annual salary as set forth in the agreement. In addition, JFK bore other costs associated with Dr. More’s employment, including expenses associated with continuing education courses, costs related to keeping his medical licenses current, $25,000 annually in medical malpractice insurance, tuition reimbursement, and reimbursement for numerous business related expenses. Dr. More developed a patient referral base and his surgical practice increased each year. On occasion, he was the featured speaker at seminars and programs sponsored by the Institute aimed toward obtaining referral sources.

[44]*44On July 17, 2001, Dr. More submitted his letter of resignation to JFK, effective July the following year, stating that “the [Institute’s] restrictive environment has become increasingly difficult to work in,” and that he had “outgrown the Institute’s current model.” At some point, JFK notified Dr. More that it intended to enforce its rights as contained in the 1999 agreement.

Dr. More ceased working at JFK on July 17, 2002. He had received offers to join other practices that were located beyond the thirty-mile restrictive area, but declined each one. Between the date of his notice of resignation and his separation date, Dr. More removed documents from the Institute identifying patients’ names and addresses, as well as the identity and location of the Institute’s referral sources.

On July 22, 2002, Dr. More affiliated with another neurosurgeon, James M. Chimenti, M.D., as an employee of Neurosurgical Associates at Park Avenues, P.A. (NAPA), located at 1111 Park Avenue, Plainfield, New Jersey. In addition to joining NAPA, Dr. More also received medical staff privileges at Somerset Medical Center (Somerset), which is located approximately thirteen and a half miles from JFK. At the time Dr. More joined NAPA, Dr. Chimenti was the only neurosurgeon taking emergency room calls at Somerset. Dr. Chimenti had been searching for over eight months for an experienced, board-certified neurosurgeon to join his practice, but until Dr.

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

Related

MCG Therapy Group, LLC v. Maestre Rivera Y Otros
Supreme Court of Puerto Rico, 2026
Vinculum, Inc., Aplt. v. Goli Technologies, LLC
Supreme Court of Pennsylvania, 2024
20231109_C361260_52_361260.Opn.Pdf
Michigan Court of Appeals, 2023
Floyd v. ADP LLC
N.D. Alabama, 2022
ETHICON INC. v. RANDALL
D. New Jersey, 2021
ADP, LLC v. LYNCH
D. New Jersey, 2020
ADP, LLC v. PITTMAN
D. New Jersey, 2019
Stonhard v. Gabriel
C.D. Illinois, 2019
Adp, LLC v. Nicole Rafferty Adp, LLC
923 F.3d 113 (Third Circuit, 2019)
ADP, LLC v. Eric Manchir
Court of Appeals of Tennessee, 2017
Synthes, Inc. v. Gregoris
228 F. Supp. 3d 421 (E.D. Pennsylvania, 2017)

Cite This Page — Counsel Stack

Bluebook (online)
869 A.2d 884, 183 N.J. 36, 22 I.E.R. Cas. (BNA) 1298, 2005 N.J. LEXIS 299, Counsel Stack Legal Research, https://law.counselstack.com/opinion/community-hospital-group-inc-v-more-nj-2005.