September 23, 2023

Allen Court grants preliminary injunction in doctor’s noncompete case — but says new law doesn’t apply

Dr. David Lankford will continue working as a pediatric specialist in the Fort Wayne area, but his case will likely rely on older laws. - (Via Allen Circuit and Superior Courts Clerk website)

Dr. David Lankford will continue working as a pediatric specialist in the Fort Wayne area, but his case will likely rely on older laws.

(Via Allen Circuit and Superior Courts Clerk website)

The Fort Wayne doctor contesting the validity of his former employer’s noncompete requirements will continue working for a competitor, after the Allen Superior Court on Friday granted him a preliminary injunction.

The case was the first known application of recent legislation further restricting noncompete agreements between physicians and their employers — but even as the court declared the doctor’s arguments “convincing,” it declined to apply that law.

Noncompete agreements bar employees who leave their jobs from working in similar positions within a certain timeframe, and typically, a geographical range. In Indiana, physicians working under such agreements can purchase their freedom for a “reasonable” price.

Debating the job description
 

Dr. David Lankford is a pediatric critical care intensivist — a sub-specialist that cares for the “sickest of the sick” children, according to the opinion — who previously worked for Lutheran Health System.

Lankford worked for four years in Lutheran’s Pediatric Intensive Care Unit, until Lutheran laid off its non-intensive pediatric hospitalists, nearly halving the pediatric department. In his lawsuit, Lankford alleged that the system shifted those doctors’ caseloads to him and the other intensivists.

Lankford argued that work was outside the scope of his contract — and the malpractice insurance with which Lutheran provided him.

Lutheran countered that a catch-all clause in the contract meant it could make Lankford do any work for which he was qualified. The system argued it therefore hadn’t breached the contract.

Lankford resigned January 5, and the system fired him the day after. In March, he began working at Parkview as an independent contractor.

His noncompete agreement — which he considered void, but that Lutheran held was valid — barred him from practicing medicine within a 30-mile radius of his previous workplace for a year. After Lutheran threatened legal action, Parkview took the doctor off its schedule.

“There is substantial evidence that Lutheran materially breached the 2020 Renewal Agreement when it began assigning Dr. Lankford to the general hospital floor,” opined Judge Craig Bobay, writing for the court.

The doctor’s “consistent” four years in the pediatric ICU show that his duties were there, Bobay wrote, and even the catch-all clause applied only to duties within the ICU.

Bobay noted that Lankford had followed the contract by sending Lutheran a notice of breach and asking for a cure within 30 days — and that when the system didn’t, Lankford was allowed to terminate the contract.

New legislation won’t apply — but old case law will

Although Bobay wrote Lankford’s breach of contract claim could be successful, he said another claim relying on a new state law didn’t apply.

Senate Enrolled Act 7, approved in May, blocked enforceability for noncompete agreements for all types of physicians in certain scenarios along with other new regulations. Those are if an employer terminates a physician’s employment “without cause,” if a physician leaves the job “for cause,” or if the contract is expired and fulfilled.

But it went into effect in July — and Lankford left his old job in January.

“The Court declines to accept Dr. Lankford’s invitation to retroactively apply (the law) to his for-cause termination that occurred before the statute’s specified date of effectiveness,” Bobay wrote.

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But, he leaned toward Lankford in a third claim that the noncompete provision was too broad.

“Indiana courts have found noncompetition agreements ‘overbroad [when they] effectively prohibit the employee from working for a competitor in any capacity,'” Bobay wrote, referencing multiple previous cases.

And because Lutheran doesn’t employ pediatric hospitalists anymore, if Lankford worked as one at Parkview, he wouldn’t be in direct competition with his former employer.

Lutheran, Bobay added, “does not have a legitimate competitive interest” in preventing the doctor “from practicing medicine altogether.”

Preliminary injunction granted

Courts consider preliminary injunctions an “extraordinary remedy” that are granted “with caution” — and only if certain conditions are met.

The court concluded that Lankford’s claims had a likelihood of success; that being prevented from working could “irreparably harm” his skills, reputation and referral base; and that those potential injuries outweighed the potential harm to Lutheran.

And, it found, the Fort Wayne area “needs” the expertise Lankford can provide, fulfilling a fourth criterion.

“The most medically vulnerable children of Allen County and northeast Indiana, as well as their families, will be served by Dr. Lankford returning to work immediately,” Bobay wrote.

“There is a substantial and urgent need for pediatric physicians to serve critically ill children in Allen County. Dr. Lankford is ready, willing, and able to provide this pediatric care, and Parkview RMC is ready, willing, and able to hire Dr. Lankford to perform this service,” he continued.

On that basis, the court granted the preliminary injunction — but the case itself will continue to unfold.

Indiana Capital Chronicle is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Indiana Capital Chronicle maintains editorial independence. Contact Editor Niki Kelly for questions: info@indianacapitalchronicle.com. Follow Indiana Capital Chronicle on Facebook and Twitter.

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