Velazquez v. Eye Health Associates, LLC

32 Mass. L. Rptr. 502
CourtMassachusetts Superior Court
DecidedOctober 1, 2014
DocketNo. SUCV201400693
StatusPublished

This text of 32 Mass. L. Rptr. 502 (Velazquez v. Eye Health Associates, LLC) is published on Counsel Stack Legal Research, covering Massachusetts Superior Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Velazquez v. Eye Health Associates, LLC, 32 Mass. L. Rptr. 502 (Mass. Ct. App. 2014).

Opinion

Leibensperger, Edward P., J.

This case presents the issue of whether restrictions imposed by an agreement on the form and scope of a physician’s practice are enforceable given the statutory bar of restrictive covenants found in G.L.c. 112, §12X. Plaintiff, Leonardo J. Velazquez, M.D. (“Dr. Velazquez”), sues seeking a declaratory judgment holding that the noncompetition and nonsolicitation provisions (“the restrictions”) imposed by two agreements he voluntarily entered into are unenforceable and void. Presently before the court is Dr. Velazquez’s motion for a preliminary injunction barring the enforcement of the restrictions. For the reasons stated below, Dr. Velazquez’s motion will be ALLOWED, in part.

[503]*503BACKGROUND

Dr. Velazquez is a physician, board certified as an ophthalmologist. In 2005, he began work for Eye Health Associates, LLC (“Eye Health”). Starting in 2010, Dr. Velazquez became a minority owner of Eye Health. In 2012, Eye Health, along with Dr. Velazquez and others, entered into an asset purchase agreement (“APA”) whereby substantially all of the assets of Eye Health were sold to Candescent Eye Health Surgicen-ter, LLC, a company owned by defendant Candescent Eye Holdings, LLC. The APA was entered into as of August 8, 2012. The closing of the purchase of assets pursuant to the APA occurred on December 12, 2012. Effective on December 14, 2012, Dr. Velazquez entered into an employment agreement (“EA”) with Candes-cent Eye Management, LLC and affiliated companies. 1 The companies purchasing the assets of Eye Health and subsequently employing Dr. Velazquez will be referred to, collectively, as “Candescent.” The purchase price paid by Candescent for the assets of Eye Health was approximately $14 million, of which approximately $2 million went to Dr. Velazquez.

Following the execution of the EA, Dr. Velazquez worked as a physician for Candescent. On March 3, 2014, Dr. Velazquez decided to leave Candescent. He gave his employer six months notice, as required by the EA, that he would be leaving on September 4, 2014. At the time he gave notice, Dr. Velazquez did not have lined up a private practice or an employment position as a physician. He has now, however, secured employment as a physician to begin in or about mid-September 2014. Dr. Velazquez’s new position is with Rhode Island Eye Institute where he will practice as a physician. As a condition of his employment, Dr. Velazquez is required to indemnify his new employer if litigation is brought to enforce the restrictions in the APA or EA. In addition, Dr. Velazquez is concerned that an action to enforce the restrictions may directly involve his new employer as well as his patients. He believes that enforcement of the restrictions will interfere with his ability to practice his profession and interfere with his patients’ access to their medical records.

The restrictions in the APA and the EA that are the subject of Dr. Velazquez’s complaint are nearly identical, except for the length of time that the restrictions are in place. Section 6.3 of the APA is entitled “Non-competition.” The section provides, in part, as follows:

[N]either the Sellers, nor any of the Owners [Dr. Velazquez], will, directly or indirectly, or as a stockholder, partner, member, manager, employee, consultant or other owner or participant in any Person other than the Purchasers, engage in or assist any other Person to engage in a “Prohibited Management Activity” anywhere in the Covered Area, provided, that each Owner may (a) deliver inpatient or outpatient professional health care services to patients, and (b) maintain medical staff membership or clinical privileges at any hospital, health care system, or other similar entity that offers or provides, or whose owner, parent, subsidiary or other affiliate offers or provides, acute care hospital services or facilities for inpatient care . . .

Section 6.3 defines “Covered Area” as anywhere in the United States. It defines “Noncompetition Period” as five years from the date of the closing of the transaction and, for an owner like Dr. Velazquez, two years from the termination of the provision of his services, but in no event to exceed seven years following the closing.

“Prohibited Management Activity” is defined in the APA as, “directly or indirectly, alone or with others, develop, own, manage, operate or control; or participate in the management or control of; or be employed by, consult with or provide services for; or maintain or continue any interest whatsoever (including without limitation as a direct or indirect owner), in a Covered Business.” In turn, “Covered Business” is defined as any business that provides services of a kind provided by purchaser during Dr. Velazquez’s employment. In an effort to clarify the intent of the parties with respect to allowing Dr. Velazquez to practice as a physician so long as he is employed by another institution in which he has no ownership interest, on April 14, 2014, Candescent granted a limited irrevocable waiver that modified the definition of “Prohibited Management Activity” to delete the phrase “or be employed by, consulted with or provide services for.”

The APA and EA also contain restrictions with respect to contacting patients of Candescent and assisting or requesting such patients to become patients of Dr. Velazquez after his departure from Candescent. Section 6.3 of the APA prohibits Dr. Velazquez from “directly or indirectly, [to] solicit or endeavor to entice away from the Purchasers any patients of the Business, nor affirmatively suggest, request or direct that any such patients request that their medical records be copied or otherwise removed or transferred from the Purchaser’s offices . . .”

Finally, the APA and EA prohibit Dr. Velazquez from enticing away from Candescent employees or otherwise interfering with the business relationship of any person with Candescent or interfering with the business relationship of Candescent with any customer or client supplier, vendor, or service provider to Candes-cent.

In the APA, Dr. Velazquez acknowledged that the duration, geographical scope and subject matter of the restrictions are reasonable and necessary to protect the goodwill, customer relationships, legitimate business interests, trade secrets and confidential proprietary information of Candescent. Dr. Velazquez also agreed that breach of the restrictive provisions would cause irreparable injury to Candescent.

[504]*504In opposition to the motion for preliminary injunction, Candescent submitted an affidavit from its chief executive officer. In the affidavit, the CEO states that Candescent has no objection to Dr. Velazquez “providing physician services to patients as a surgeon specializing in ophthalmologic and retinal surgery with Rhode Island Eye Institute.” The affidavit of the CEO does not state, however, that Candescent would not object to Dr. Velazquez assisting or soliciting patients of Candescent to become his patients at Rhode Island Eye Institute. In another affidavit from a board member of Candescent, it is stated that the restrictive covenants were intended only to restrict Dr. Velazquez’s ability to own or manage a competing business. Nevertheless, the affidavit is clear that Can-descent does not consent to Dr. Velazquez’s assisting or soliciting patients of Candescent to be treated by Dr. Velazquez or to move their medical records to Dr. Velazquez. The clear implication of both affidavits is that Candescent will seek to prohibit Dr.

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Bluebook (online)
32 Mass. L. Rptr. 502, Counsel Stack Legal Research, https://law.counselstack.com/opinion/velazquez-v-eye-health-associates-llc-masssuperct-2014.