Following new statute, Allen Co. doctor sues to block noncompete

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Editor’s note: This article has been updated.

In what is possibly the first lawsuit filed following the enactment of Indiana’s new statute restricting physician noncompetes, an Allen County doctor is suing his former employer to stop the enforcement of a noncompete clause after he terminated his employment agreement “for cause.”

Dr. David Lankford is alleging that Lutheran Medical Group LLC continues to interfere with his attempts to provide care to children at another health care system in Fort Wayne, according to the complaint, David Lankford, D.O. v. Lutheran Medical Group, LLC, 02D02-2307-PL-000261.

“I am a physician committed to providing the highest quality specialty care to Allen County’s children,” Lankford said in a statement released by his attorney, Kathleen DeLaney of DeLaney & DeLaney LLC. “Lutheran’s continued interference with my ability to provide that care harms no one more than the children who need access to health care. I hope that by standing up to Lutheran, I can embolden other physicians to stand up to health care systems which seemingly focus more on their financial bottom lines than on patient access to quality health care.”

In the lawsuit, Lankford is asking the Allen County Commercial Court to block defendant Lutheran Medical Group from enforcing the noncompete clause and declare it unenforceable.

According to the complaint, Lutheran hired Lankford in October 2017 as a pediatric critical care intensivist. He executed a renewal physician employment agreement in November 2020 that included a noncompete clause. The terms of the noncompete are redacted in the complaint.

In August 2022, Lutheran announced that it would begin laying off its pediatric hospitalists. When the announcement was made, Lutheran “reiterated to its four pediatric intensivists, including Dr. Lankford, that Lutheran expected the pediatric intensivists to cover the work the pediatric hospitalists would normally perform, in addition to the duties the pediatric intensivists had agreed to provide … .”

Lankford asked to renegotiate the employment agreement based on those additional duties, but Lutheran refused, the lawsuit claims.

The layoffs occurred in October 2022, at which point “Lankford’s patient volume immediately ballooned” while Lutheran “refused to provide any additional support … .” Lankford was not offered additional pay, according to the complaint.

Requiring Lankford to cover the work of the pediatric hospitalists exceeded the scope of the agreement, he alleges, and placed his career and medical license at risk.

Thus, in December 2022, Lankford sent a letter to Lutheran alleging it had breached the employment agreement. Lutheran denied any breach, so Lankford terminated the agreement “for cause” on Jan. 7.

Meanwhile, Indiana’s statute regulating physician noncompetes went into effect July 1. That statute provides that when a physician terminates employment for cause, the noncompete is unenforceable.

“Because Lutheran materially breached the Agreement, it may not seek to enforce the Agreement against Dr. Lankford — including, but not limited to, the Non-Compete,” the complaint says.

It continues, “New Indiana statutory law similarly renders the Non-Compete unenforceable. Indiana Code § 25-22.5-5.5-2 provides: ‘Beginning July 1, 2023, a physician noncompete agreement is not enforceable if any of the following circumstances occur: … (2) The physician terminates the physician’s employment for cause.’ Dr. Lankford terminated the Agreement for cause — namely, Lutheran’s breach and failure to cure after being provided notice and a 30-day cure period — on January 7, 2023. Under Ind. Code § 22-22.5-5.5-2, the Non-Compete is unenforceable.”

Lankford in the complaint requests that the commercial court enter a preliminary injunction prohibiting Lutheran and anyone affiliated from enforcing or threatening to enforce the noncompete. He also requests a permanent injunction requiring Lutheran to continue complying with the terms of the preliminary injunction.

In addition, the complaint is seeking declaratory judgment and costs.

“My firm is proud to stand by Dr. Lankford as he seeks to hold Lutheran accountable,” DeLaney said in a news release. “This may be the first lawsuit filed under Indiana’s new physician noncompete law, which the Indiana General Assembly designed to protect physicians and the communities they serve from the type of interference Lutheran has engaged in here. We are hopeful that Dr. Lankford’s bravery and commitment to serving Allen County will ultimately broaden both patient access to health care and doctors’ freedom to practice medicine in Indiana’s communities.”

A spokesperson for Lutheran declined to comment.

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