Prairie Rheumatology Assocs. v. Francis (Summary)

RESTRICTIVE COVENANTS

Prairie Rheumatology Assocs. v. Francis, No. 3-14-0338 (Ill. App. Ct. Dec. 11, 2014)

The Third District Appellate Court of Illinois affirmed in part and reversed in part a trial court’s orders regarding a physician group’s request for a preliminary injunction. The physician group sought the injunction after one of its former employees, a rheumatologist, failed to abide by a restrictive covenant in her employment agreement. This restrictive covenant prevented the rheumatologist from entering into a competitive practice within a 14-mile radius of the physician group’s offices.

In the trial court, the physician group succeeded in obtaining a limited preliminary injunction that prevented the rheumatologist from treating the current patients of the physician group. However, the trial court refused to enforce the non-competition agreement with respect to the general public. The physician group appealed this decision, arguing that the trial court had abused its discretion by declining to enforce the restrictive covenant in full. The rheumatologist countered by arguing that the restrictive covenant was unenforceable altogether, as it lacked adequate consideration.

The appellate court agreed, explaining that under state law, two years or more of continued employment constitutes adequate consideration for a restrictive covenant. This rule is maintained even if the employee resigns on her own instead of being terminated. In this instance, because the rheumatologist resigned after 19 months, her employment with the physician group had not constituted sufficient consideration to support the restrictive covenant.

In addition, the court noted that the rheumatologist received “little or no additional benefit” from the physician group in exchange for her agreement not to compete, noting that the physician group had not assisted her with obtaining hospital privileges nor had the group introduced her to any referral sources. Consequently, it concluded that the restrictive covenant was not enforceable altogether. It reversed the trial court’s decision to enforce the restrictive covenant for the group’s current patients and remanded the case for further proceedings.