White v. Mederi Caretenders Visiting Servs. of Se. Fla., LLC

• Citation: 226 So.3d 774
• Decision Date: 14 September 2017
• Docket Number: Nos. SC16-28, SC16-400.,s. SC16-28, SC16-400.
• Parties: Elizabeth WHITE, Petitioner, v. MEDERI CARETENDERS VISITING SERVICES OF SOUTHEAST FLORIDA, LLC, et al., Respondents. Americare Home Therapy, Inc., Petitioner, v. Carla Hiles, Respondent.
• Court: United States State Supreme Court of Florida

226 So.3d 774

Elizabeth WHITE, Petitioner,

v.MEDERI CARETENDERS VISITING SERVICES OF SOUTHEAST FLORIDA, LLC, et al., Respondents.

Americare Home Therapy, Inc., Petitioner,

v.Carla Hiles, Respondent.

Nos. SC16-28, SC16-400.

Supreme Court of Florida.

[September 14, 2017]

Jane Kreusler–Walsh, Rebecca Mercier Vargas, and Stephanie L. Serafin of Law Office of Kreusler–Walsh, Compiani & Vargas, P.A., West Palm Beach, Florida; Margaret Cooper of Jones, Foster, Johnston & Stubbs, P.A., West Palm Beach, Florida; and Joel C. Zwemer and Daryl J. Krauza of Dean, Mead, Minton & Zwemer, Fort Pierce, Florida, for Petitioner Elizabeth White

W. Braxton Gillam, IV, Peter E. Nicandri, and Patrick W. Joyce of Milam Howard Nicandri Gillam & Renner, P.A., Jacksonville, Florida, for Petitioner Americare Home Therapy, Inc., a Florida Corporation d/b/a Americare Home Health

Patrick M. Muldowney and James W. Seegers of Baker & Hostetler LLP, Orlando, Florida, for Respondents Mederi Caretenders Visiting Services of Southeast Florida, LLC, and Almost Family, Inc., a Delaware Corporation

Keith J. Hesse of Shuffield, Lowman & Wilson, P.A., Orlando, Florida, for Respondent Carla Hiles

LEWIS, J.

Two cases have been consolidated and are before the Court for review. First, we review the decision of the Fourth District Court of Appeal in Mederi Caretenders Visiting Services of Southeast Florida, LLC v. White, 179 So.3d 564 (Fla. 4th DCA 2015). In White, the district court, relying on Infinity Home Care, L.L.C. v. Amedisys Holding, LLC, 180 So.3d 1060 (Fla. 4th DCA 2015), certified that its decision is in direct conflict with the decision of the Fifth District Court of Appeal in Florida Hematology & Oncology v. Tummala, 927 So.2d 135 (Fla. 5th DCA 2006). White, 179 So.3d at 564. Second, we review the decision of the Fifth District in Hiles v. Americare Home Therapy, Inc., 183 So.3d 449 (Fla. 5th DCA 2015). In Hiles, the district court, relying on Tummala, certified that its decision is in direct conflict with the decision of the Fourth District in Infinity Home. ? Hiles, 183 So.3d at 454. We have jurisdiction. See? art. V, § 3(b)(4), Fla. Const.

The issue presented is whether home health service referral sources can be a protected legitimate business interest under section 542.335, Florida Statutes (2016).¹ For the reasons that follow, we approve the decision in White, quash the decision in Hiles, and hold that home health service referral sources can be a protected legitimate business interest under the statute.

FACTUAL AND PROCEDURAL BACKGROUND

The Parties

First, Petitioner, Elizabeth White, is a former employee of the Respondents, Almost Family, Inc. and its Florida-based subsidiary Mederi Caretenders Visiting Services of Southeast Florida, LLC (collectively Caretenders). Caretenders is a licensed home health care company (HHC).

Second, Respondent, Carla Hiles, is a former employee of the Petitioner, Americare Home Therapy, Inc. (Americare). Americare is also a licensed HHC.

The Home Health Services Industry

HHCs provide skilled nursing, physical therapy, and other home health services to homebound patients. To attract and develop their businesses, HHCs seek referrals from multiple patients' health care providers. Generally, patients seek an HHC after a referral from a physician, hospital, or skilled nursing facility. Depending on the circumstances, the specific referral source varies between doctors, case managers, and referral coordinators. Accordingly, HHCs employ marketing representatives whose primary roles are to cultivate relationships with referral sources in the hope of securing future patient referrals. To effectively solicit referrals, HHCs train their representatives to market and promote the HHC services.

The importance of referrals to HHCs cannot be overstated. One HHC representative testified that without marketing representatives, "his company would no longer be viable." To facilitate their business, HHCs compile internal databases of referral source preferences, strategies, and procedures, which the representatives utilize. Just general nominal information about referral sources is publicly available and known among HHCs. Referral sources neither receive nor pay for the services. The referral relationships are not exclusive and patients have the ultimate decision with regard to which HHC will be selected. Still, some regulations require doctors to write a referral prior to the patient receiving HHC services, similar to a prescription.

Some of the services provided by HHCs are paid for through Medicare which has defined reimbursement rates. As a result, HHCs are highly regulated at both the state and federal levels. For instance, federal "Stark Law" prohibits referring Medicare patients to entities in which the physician has a financial interest. See? 42 U.S.C. § 1395nn (2017). Likewise, non-monetary gifts are limited by regulations.

The Facts of White

White began working at Caretenders as a marketing representative in 2010. Her primary responsibility was to solicit physicians and medical facilities for home health service referrals to Caretenders in both Martin and St. Lucie counties. Prior to this employment, White had never worked in the HHC industry and had no marketing skills, training, or experience. As a condition of employment, Caretenders required White to sign a confidentiality and non-compete agreement. This non-compete prohibited White from working for or soliciting referrals for any competing HHC in Martin and St. Lucie counties for one year after leaving Caretenders for any reason. White became dissatisfied and resigned in June 2011. White returned all of Caretenders' materials, in compliance with one provision of the non-compete agreement, but accepted a job with a directly competing HHC, Omni Home Health (Omni).

It is undisputed that while working for Omni within the non-compete territory, White marketed to and attempted to solicit from referral sources for Omni, with whom she had developed relationships based on and during her employment at Caretenders. During this time, Caretenders experienced a decline in new patient referrals from the sources formerly assigned to White. After Caretenders threatened legal action, Omni reassigned White to a region outside the non-compete territory for over one year, in accordance with the non-compete contract.

In December 2011, Caretenders filed a legal action against White, alleging that she violated the non-compete agreement. White moved for summary judgment, contending, where relevant, that the non-compete agreement was unenforceable because referral sources are not a legitimate business interest under section 542.335 or Tummala as a matter of law. The trial court expressly relied on Tummala and entered a summary judgment in favor of White, concluding that referral sources are not a legitimate business interest that may be protected. On appeal, the Fourth District reversed the trial court and certified conflict with Tummala.

The Facts of Hiles

Hiles began working at Americare as a home health liaison in 2011. Her primary responsibility was to market and solicit referral sources for Americare in Volusia County. Before working at Americare, Hiles had worked at a doctor's office in Volusia County for eight years, where her duties included some involvement in directly referring patients to HHCs. However, she did not work for an HHC prior to Americare. As a condition of her continued employment with Americare, Hiles executed a non-compete, non-solicitation, and non-disclosure agreement. This non-compete contract prohibited Hiles from working for any competing HHC within fifty miles of any referral sources that she solicited at Americare for one year after termination of her employment with Americare. Further, during the one-year non-compete period, Hiles was prohibited from soliciting any referral source that any Americare employee had solicited for Americare during the previous year. This non-compete prohibition applied to a territory of twenty-three counties where Americare operated.

While still working for and being paid by Americare, Hiles began negotiating employment with Doctor's Choice, a directly competing HHC. While still employed by Americare, Hiles gave her non-compete agreement to Doctor's Choice, to obtain an opinion regarding its enforceability, and then began transferring confidential documents from Americare's secure server to her personal e-mail. Even after Hiles tendered her resignation to Americare, on October 3, 2014, she continued to transfer private and confidential documents, including patient names and treatment information, to her personal e-mail. On October 6, 2014, Americare informed Hiles that her employment was terminated. That afternoon, Hiles began working for Doctor's Choice and, again, continued transferring Americare's confidential documents to her personal e-mail. Hiles testified that she transferred the documents to protect her financial interest in receiving a bonus. However, many of the documents that Hiles absconded with from Americare would not serve that purpose. One of those documents was Americare's list of very lucrative referral sources, which an Americare representative called a "target list" for competing HHCs.

While working for Doctor's Choice, Hiles solicited the same referral sources that she had solicited for Americare in Volusia County. In the twelve months prior to Hiles' departure from Americare, the referrals assigned to Hiles generated approximately $712,000 in gross revenue for Americare. Contrarily, in October 2014, Americare received no referrals from those same sources. The following month, Americare received a significantly decreased volume of referrals from those sources. Americare contends that this downturn was due directly to Hiles' conduct and departure; even though there may be multiple factors that may increase or decrease home health service referrals from month-to-month.

Shortly after her departure, Americare learned...