Florida Supreme Court Extends Reach of Noncompetes in Health Care Industry
Author: David B. Weisenfeld, XpertHR Legal Editor
September 22, 2017
Home health service referrals can be a legitimate business interest protected under a noncompetition agreement, the Florida Supreme Court has ruled. The finding strengthens the hand of Sunshine State employers that seek to protect their businesses from departing employees looking to aid a competitor.
The Court's unanimous opinion in a pair of cases, White v. Mederi Caretenders Visiting Services of Southeast Florida and Americare Home Therapy v. Hiles, involved the question of whether an employer can safeguard referral sources in a noncompete agreement.
While Florida's noncompete law does not directly include a "referral source" as a legitimate business interest, the Court said the importance of referrals to home health care agencies cannot be overstated. It noted that one home health care representative had testified that without marketing representatives, "his company would no longer be viable."
Referral relationships are not exclusive, and patients have the ultimate decision as to which home health care agency they will select. Nonetheless, a representative can play a critical role.
Both cases involved marketing reps who solicited physicians and medical facilities for home health service referrals. In each situation, the marketing reps left their employer for a direct competitor, despite having a one-year noncompete agreement in place. The former employers claimed that the number of referrals they received dropped significantly as a result.
The Florida Supreme Court concluded that protecting referral sources may be necessary to prevent unfair competition in certain industries, such as home health services, due to unique circumstances. However, it stopped short of saying noncompetes governing referrals will always be protected, noting that Florida law does not protect covenants "whose sole purpose is to prevent competition per se" because those contracts are illegal for public policy reasons.