Restrictive covenants are intended to protect an employer’s legitimate interest against unfair competition from former employees. In the medical profession, restrictive covenants are a vital component of any physician employment contract. Without such covenants, physician-employees are free to leave their employers on their own terms, which can often result in solicitation of the patient base and dilution and even destruction of a provider’s valuable and hard-earned patient and referral bases. Likewise, an employer’s monetary investment in a departing physician and in building up goodwill within a particular locale can be rendered moot where a former physician-employee is able to establish a competing practice across the street. Indeed, the problems associated with the failure to include a restrictive covenant in an employee’s contract can prove substantial for an employer in the medical profession, and that failure can quickly lead to a costly pattern of physicians and/or patients leaving to practice or treat elsewhere.
While it is true that, as a general matter under New York law, agreements that restrict an individual’s right to work or compete are disfavored, Long Island Minimally Invasive Surgery v. St. John’s Episcopal Hosp., 164 A.D.3d 575, 577 (2d Dep’t 2018), leave to appeal denied, 32 N.Y.3d 913 (2019), New York courts will often enforce restrictive covenants in situations involving medical professionals, provided they pass a test of “reasonableness,” which generally involves consideration of the time and geographic scope of the restriction, whether a legitimate employer interest exists, the potential burden on the employee and public policy implications. Suffolk Anesthesiology Assocs. v. Verdone, D.O., No. 37932/2008, 2009 WL 10442162, at *3 (Sup. Ct., Suffolk Cty. Sept. 28, 2009), aff’d 74 A.D.3d 953 (2d Dep’t 2010) (citing BDO Seidman, 93 N.Y.2d 382, 388-89 (1999); Gelder Med. Group v. Webber, 41 N.Y.2d 680, 683 (1977); Albany Med. Coll. v. Lobel, 296 A.D.2d 701, 702 (3d Dep’t 2002)); see also North Shore Hematology/Oncology v. Zervos, 278 A.D.2d 210, 211 (2d Dep’t 2000); Rifkinson-Mann v. Kasoff, 226 A.D.2d 517, 517-18 (2d Dep’t 1996). In doing so, courts have reasoned that physicians are likely to have strong relationships with patients because they have personal contact with their patients, which develops patient confidence and goodwill. Keen v. Schneider, 114 N.Y.S.2d 126 (Sup. Ct., Suffolk Cty. 1952), aff’d 280 A.D. 954 (2d Dep’t 1952).
