Illinois Insights: Non-Compete Agreements and Medical Providers

Thomson Reuters Practical Law December 2015

Zachary C. Jackson, a Member of the Firm in the Labor and Employment practice, in the firm’s Chicago office, authored an article in Thomson Reuters Practical Law titled “Illinois Insights: Non-Compete Agreements and Medical Providers.” (Read the full version – subscription required.)

Following is an excerpt:

Nuances in Non-Competes Involving Hospitals

A medical provider may sign a non-compete restricting his ability to maintain a medical practice but, in fact, not be prohibited from practicing medicine. At least one Illinois appellate court has held that a hospital was not considered a "medical practice" as the term was used in a covenant not to compete, allowing a former physician to retain staff privileges at a hospital within a restrictive covenant's geographic scope (Joliet Med. Grp., Inc. v. Ensminger, 787 N.E.2d 879, 882 (Ill. App. Ct. 2003)). Whereas "practicing medicine" is engaging in the provision of medical services, a "medical practice" is a physician's business (Joliet, 787 N.E.2d at 881).

In Joliet Medical Group v. Ensminger, the non-compete prohibited the physician from establishing a medical practice within the geographic scope of the restrictive covenant but did not restrict him from practicing medicine within that same region. While hospitals are exempt from the prohibition against corporations practicing medicine, they do not constitute a medical practice under Illinois law. (787 N.E.2d at 881.)