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Justices split on transfer of noncompete case

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Two Indiana Supreme Court justices disagreed with their colleagues in not accepting an appeal, finding that a ruling from the state's intermediate appellate court muddled caselaw on medical business and noncompete agreements, and significantly jeopardizes the public's access to medical care.

In a seven-page dissent authored by Chief Justice Randall T. Shepard and joined by Justice Brent Dickson, the two jurists get into why they would have granted transfer in the case of Mercho-Roushdi-Shoemaker-Dilley Thoraco-Vascular Corp. (MRSD) v. James W. Blatchford, III, M.D., and Eve G. Cieutat, No. 84A01-0801-CV-30.

The Feb. 5, 2009, Court of Appeals decision involves the enforceability of a noncompete agreement between doctors and a physicians' group, and this transfer denial keeps in place that holding that could significantly impact Indiana's medical community.

Originating from Vigo Superior No.1, the case goes back more than a decade and involves a group of open-heart surgeons in Indianapolis and Terre Haute who recruited a husband-wife team from Texas to provide more staff capacity at one location. All parties negotiated agreements covering multiple aspects of their business relationship, from stock purchasing to dissolution procedures and noncompete provisions. When the Texas doctors decided several years later to set up a competing practice of their own in Terre Haute, they and their former associates sued each other.

That first round of litigation went to the Court of Appeals, which in 2001 affirmed a trial judge's denial of injunctive relief for the Indiana-based physicians on grounds that an adequate remedy existed at law. But a second round of litigation ensued, and the Court of Appeals affirmed that ruling and held that the noncompete agreements weren't enforceable. In its decision from earlier this year, the three-judge panel unanimously held that enforcing the physicians' business agreements in this case is harmful to patients and contrary to public policy. Specifically, it affirmed solely based on the public interest prong of noncompetition agreement evaluation.

Deciding on the issue during its weekly conference Dec. 17, three justices agreed with the appellate panel's decision and voted not to accept the case. But Chief Justice Shepard and Justice Dickson disagreed with their colleagues.

The chief justice found issues with how James Blatchford and Eve Cieutat had no Indiana connections yet raised arguments that "people would die without (them) practicing in Terre Haute, that it would be very difficult to recruit doctors with their level of training to the area, and that there would be a shortage of capable doctors if they left." The two doctors have since left the state to practice elsewhere.

The chief justice wrote that the physicians group MRSD, and others in similar situations, likely wouldn't have recruited the Texas doctors or any others from outside Indiana if noncompete agreements weren't an option.

"While it is appropriate to treat employment agreements involving doctors with special care, failure to enforce at law the business agreements among doctors will mean fewer doctors available to patients, not more," he wrote, adding later that the Court of Appeals decision "muddles the caselaw of the medical business."

"This case illustrates why non-enforcement of such agreements has the potential to detract from the public interest. Denying damages to a practice seeking to enforce its business arrangements detracts from the very public interests that this Court's decisions aim to protect - patient access to medical care," Chief Justice Shepard wrote. "I think the patients (and doctors) would be well served by vacating the Court of Appeals' declaration that business arrangements between physicians are not enforceable."

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  1. Thank you, John Smith, for pointing out a needed correction. The article has been revised.

  2. The "National institute for Justice" is an agency for the Dept of Justice. That is not the law firm you are talking about in this article. The "institute for justice" is a public interest law firm. http://ij.org/ thanks for interesting article however

  3. I would like to try to find a lawyer as soon possible I've had my money stolen off of my bank card driver pressed charges and I try to get the information they need it and a Social Security board is just give me a hold up a run around for no reason and now it think it might be too late cuz its been over a year I believe and I can't get the right information they need because they keep giving me the runaroundwhat should I do about that

  4. It is wonderful that Indiana DOC is making some truly admirable and positive changes. People with serious mental illness, intellectual disability or developmental disability will benefit from these changes. It will be much better if people can get some help and resources that promote their health and growth than if they suffer alone. If people experience positive growth or healing of their health issues, they may be less likely to do the things that caused them to come to prison in the first place. This will be of benefit for everyone. I am also so happy that Indiana DOC added correctional personnel and mental health staffing. These are tough issues to work with. There should be adequate staffing in prisons so correctional officers and other staff are able to do the kind of work they really want to do-helping people grow and change-rather than just trying to manage chaos. Correctional officers and other staff deserve this. It would be great to see increased mental health services and services for people with intellectual or developmental disabilities in the community so that fewer people will have to receive help and support in prisons. Community services would like be less expensive, inherently less demeaning and just a whole lot better for everyone.

  5. Can I get this form on line,if not where can I obtain one. I am eligible.

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