W. Carroll Health Sys., L. L.C. v. Tilmon

• Citation: 92 So.3d 1131
• Decision Date: 16 May 2012
• Docket Number: No. 47,152–CA.,47,152–CA.
• Parties: WEST CARROLL HEALTH SYSTEM, L.L.C. d/b/a West Carroll Memorial Hospital, Plaintiff–Appellee v. John TILMON, Defendant–Appellant.
• Court: Court of Appeal of Louisiana (US)

92 So.3d 1131

WEST CARROLL HEALTH SYSTEM, L.L.C. d/b/a West Carroll Memorial Hospital, Plaintiff–Appellee

v.John TILMON, Defendant–Appellant.

No. 47,152–CA.

Court of Appeal of Louisiana,Second Circuit.

May 16, 2012.

Travis M. Holley, Bastrop, LA, for Appellant.

Crawford & Ogg by Brian E. Crawford, Monroe, LA, Ramsey L. Ogg, John M. Lancaster, Oak Grove, LA, for Appellee.

Before BROWN, CARAWAY and SEXTON (Pro Tempore), JJ.

CARAWAY, J.

[2 Cir. 1]Alleging a breach of a noncompetition agreement, the plaintiff health care provider brought this injunction action against its former employee who had become employed by another health care company. The defendant is a physician assistant. In the defendant's new employment, he began work in a nearby parish which was not listed in the noncompetition agreement as a parish in which his employment might be restrained. However, on one occasion, defendant performed work in a clinic operated by his new employer in Morehouse Parish, a parish that was listed in the noncompetition agreement. As a result, the former employer filed this suit and the trial court enjoined defendant from providing health care services in any employment in Morehouse Parish. The defendant appealed. Finding error in the trial court's application of La. R.S. 23:921 and its enforcement of the noncompetition agreement, we reverse.

Facts

On July 15, 2011, West Carroll Health System, L.L.C. (hereinafter “WCHS”), filed this action to enforce a noncompetition provision in the employment contract with its former employee, John Tilmon. WCHS's petition requested a preliminary and permanent injunction to prevent Tilmon from employment activities he had begun in Morehouse Parish. Tilmon had been employed by WCHS in West Carroll Parish as a physician assistant from April 19, 1997, until June 30, 2011.¹

[2 Cir. 2]When Tilmon was hired in 1997, the parties executed an employment contract with a two-year term. This initial employment contract was never renewed. Nevertheless, the parties executed an agreement on February 10, 2004, entitled “amendment to employment agreement,” which contained only the noncompetition provision. The original employment contract between the parties did not state a noncompetition agreement.

The noncompetition agreement provides as follows:

3.3.1 Non–Competition: Employee covenants that during the term of this Agreement and for a period of two (2) years from the Termination Date of this Agreement (“Termination Date”), whether the Agreement is terminated with or without cause, Employee shall not directly or indirectly provide health care services, either as an employee, partner, member, individual provider or otherwise, or own, manage, participate in or work for any business or person which engages in the ownership, operation or management of any health care provider (including, without limitation, hospitals, single or multi-specialty medical care providers and rural health clinics) that is engaged in a business similar to that of Employer, located in the parishes of West Carroll, East Carroll, Morehouse and Richland, State of Louisiana, and the county of Chicot, State of Arkansas, and any other parish or county in which Employer or an affiliated rural health clinic renders medical services as of the Termination Date (the “Restricted Area”).

Employee expressly agrees that any breach of this Agreement will result in irreparable damage and injury to Employer and that, in the event Employee breaches or threatens to breach the covenant not to compete, Employer shall be entitled to specific performance including immediate injunctive relief in the form of a temporary restraining order and/or preliminary injunction in any court of competent jurisdiction without the necessity of posting any bond. Employer's right to injunctive relief is independent of, and shall not limit Employer's right to, stipulated damages, costs, and expenses, including attorney's fees. In the event it is necessary to enforce this Agreement through legal proceedings, Employee agrees to pay all legal fees, court costs and other expenses incurred in the enforcing of this Agreement by Employer.

Prior to Tilmon's six-week notification period and resignation from WCHS, he secured new employment with Sterlington Rural Health Clinic [2 Cir. 3]“SRHC”). Since SRHC has facilities in Morehouse Parish and other surrounding parishes, Tilmon asked Randy Morris, WCHS's Chief Executive Officer and Hospital Administrator, to waive the noncompetition agreement for Tilmon's new employment in Morehouse Parish. Despite his inability to secure a waiver of the noncompetition agreement, Tilmon worked for one day in the summer of 2011 at SRHC's clinic at Mer Rouge in Morehouse Parish where he filled in for a nurse practitioner. With this position, it is not clear if Tilmon was employed to perform only the temporary duties of a nurse practitioner or whether he might undertake additional duties of a physician assistant somewhere in Morehouse.

In response to WCHS's suit, Tilmon filed exceptions of no cause of action and no right of action on July 21, 2011. Asserting that WCHS does not have health care facilities or “carry on a like business” in Ouachita and Morehouse Parishes, Tilmon argued that the noncompetition agreement is null and void on its face to prohibit his employment there based upon the clear language of La. R.S. 23:921(C). In addition, the defendant argued that the geographic location section of the noncompetition agreement is overly broad, rendering the agreement unenforceable. According to Tilmon, the language which prohibits employment in “any other parish or county in which Employer or an affiliated rural health clinic renders medical services” is overly broad.

On August 1, 2011, the trial court held a hearing on the exceptions and WCHS's request for injunctive relief. At the hearing, Tilmon testified, [2 Cir. 4]and Morris agreed, that the following is an adequate job description of the physician assistant's role which Tilmon performed:

A physician assistant is a physician extender, he provides extended care to patients of said physicians and he does not have patients of his own, he has—he works under a physician as an employee or as an agent of the physician, much like an LPN works under an RN to extend the RN's capabilities to see more patients, to treat and care for more patients. So as a physician assistant ... I extended Dr. Fakhre's realm and ability to care for more patients that he couldn't see by himself.

According to Tilmon, “physician assistants are paid for usually by hospital groups or by said groups and then placed under the services of the doctors that they—I also worked for several doctors in the emergency room and in the hospital.”

In its petition, WCHS asserted that it operates a “hospital in West Carroll Parish, Louisiana, along with providing medical services in other parishes.” Additionally, Tilmon testified that Community Medical Clinic, West Carroll Memorial Hospital, West Carroll Care Center and Carroll Nursing Home are all owned and operated by WCHS in West Carroll Parish. Tilmon testified that he worked all of these facilities, at least once, while he was employed by WCHS.

In contrast to these West Carroll facilities, the parties agreed that WCHS does not have any buildings or health care facilities outside of West Carroll Parish. As for Morehouse Parish, WCHS's only business involves providing home health care services. Notably, Tilmon's current employer, SRHC, does not perform home health services in Morehouse Parish. In addition, all of WCHS's revenue in Morehouse Parish stems from these [2 Cir. 5]home health services and none of these services are rendered by physician assistants.

Furthermore, WCHS does not have a physician or a physician assistant directly performing services in Morehouse Parish. The evidence indicated that Tilmon cannot perform home health services unless specifically authorized by a physician.

The policy behind the noncompetition agreement's inclusion of Morehouse and other surrounding parishes in the agreement was discussed by Randy Morris, as follows:

While he [Tilmon] was employed at West Carroll in his—compliments to him, he's an excellent provider of health care and had a big following of patients. The fact that he would be practicing in Mer Rouge, in Morehouse Parish there's a tendency that those patients would seek health care with them—with him and his new employer at the detriment to West Carroll Health Systems.

Since WCHS has at least 280 patients who reside in Morehouse Parish and travel to West Carroll for medical services, it argued that Tilmon should be restricted from providing services as a physician assistant in that parish. WCHS further argued that as its physician assistant, Tilmon ordered prescriptions and diagnostic tests during his prior employment for WCHS's patients that were provided in Morehouse Parish.

From the hearing, there was little evidence regarding Tilmon's current employer, SRHC. Tilmon testified that SRHC hired him in spite of the noncompetition agreement. SRHC hired him as a physician assistant, and Tilmon performs most of his services at SRHC's rural health clinic in Ouachita Parish. Since Ouachita was not listed in the noncompetition agreement, the current litigation stems from Tilmon's activities as an SRHC [2 Cir. 6]employee in Morehouse. The evidence indicated that SRHC may operate a hospital in Morehouse Parish in Bastrop and employ the services of a physician assistant at that facility. While working for SRHC, Tilmon testified that he was told to report to work at SRHC's clinic in Morehouse Parish. He worked in that parish for only one day, because the clinic needed him to fill in for an ailing nurse practitioner.

In its oral reasons, the trial court noted that the defendant had full knowledge and understanding of the noncompetition agreement. Relying on AMCOM of Louisiana, Inc. v. Battson, 96–0319 (La.3/29/96), 670 So.2d 1223, ...