South Dakota Physician Challenges Noncompetition Clause

A judge has restricted the ability of a large health care organization to include non-compete agreements in physician contracts.

A county judge in South Dakota recently restricted the ability of a large health care organization to include non-compete agreements in physician contracts.

Sanford Health, which is based in Fargo, ND, and Sioux Falls, SD, said it will appeal the decision, and legal scholars expect the case to make its way to the South Dakota Supreme Court, the Argus Leader reported.

“On July 29, Judge Doug Hoffman ruled that a non-compete agreement included in Sanford’s standard physician contracts runs afoul of state law because it has the potential to interfere with the doctor-patient relationship,” the paper reported. The ruling was part of a wrongful termination lawsuit brought against Sanford Clinic by JoAnn Ormand, MD, a former Sanford gastroenterologist who was fired in 2008.

In South Dakota, non-compete agreements can restrict physicians from working within 20 miles of their previous office for two years after their employment ends.

In court, Sanford argued that the agreements are so widely used that Hoffman’s ruling will call into question the terms under which many members of the state’s medical community work every day.

“(This ruling) has wide-reaching ramifications for clinics, health care facilities and physicians throughout this state,” the court paperwork said.

“My case raises important issues against Sanford in addition to challenging the legality of Sanford’s longtime practice of restricting a physician from continuing to practice medicine and see patients in his or her own South Dakota community when leaving Sanford’s employment,” Ormand said in a statement.

“While I do not welcome the inevitable delays in moving forward to trial on the other important issues of my case while the South Dakota Supreme Court takes up Judge Hoffman’s ruling, I strongly believe that full review of Judge Hoffman’s ruling by the South Dakota Supreme Court will serve the best interests of all South Dakotans and, ultimately, produce a statewide decision that fully recognizes and protects the integrity of the doctor-patient relationship,” it said.

“Judge Hoffman’s ruling is based upon the principles that a physician provides more to the public than just labor for hire, and that a patient is more than just a name on a customer list.”

SourceCase Tests Limits Where Doctors Work