Mohanty, M.D. St. John Heart Clinic

Docket No. 101251.

IN THE

SUPREME COURT

OF

THE STATE OF ILLINOIS

JYOTI MOHANTY, M.D., et al., Appellants, v. ST. JOHN HEART

CLINIC, S.C., et al., Appellees.

Opinion filed December 21, 2006.

JUSTICE BURKE delivered the judgment of the court, with

opinion.

Chief Justice Thomas and Justices Fitzgerald and Kilbride

concurred in the judgment and opinion.

Justice Karmeier specially concurred, with opinion, joined by

Justice Garman.

Justice Freeman concurred in part and dissented in part, with

opinion.

OPINION

Dr. Jyoti Mohanty and Dr. Raghu Ramadurai (plaintiffs) appeal

the judgment of the appellate court reversing the circuit court of Cook

County’s denial of a preliminary injunction to St. John Heart Clinic

and its owner, Dr. John Monteverde (defendants), to enforce the

restrictive covenants contained in their medical practice employment

contracts. 358 Ill. App. 3d 902. Plaintiffs, in opposition to the

injunction, ask this court to declare restrictive covenants in medical

practice cases void as against public policy. In the alternative,

plaintiffs argue that the restrictive covenants contained in their

employment contracts are not enforceable because the restrictions are

unreasonably overbroad in time and activity, or because the

defendants materially breached the employment contracts, thereby

discharging plaintiffs from their obligations under the contract.

For the reasons stated below, we affirm the judgment of the

appellate court and remand for further proceedings consistent with

this opinion.

BACKGROUND

St. John Heart Clinic (the Clinic) is an Illinois professional medical

corporation founded by Dr. John Monteverde in 1978. Dr.

Monteverde is board certified in internal medicine and cardiology and

the sole shareholder and owner of the Clinic, which has two offices in

Chicago, one at St. Mary of Nazareth Hospital and one at Norwegian

American Hospital. Dr. Monteverde also has privileges at St.

Elizabeth and Sacred Heart hospitals in Chicago and has practiced at

these hospitals since 1978.

Dr. Ramadurai began working at the Clinic in 1989 as an

independent contractor. At that time, Dr. Ramadurai was not board

certified in cardiology. Thus, initially, Dr. Ramadurai worked under

the direction and supervision of Dr. Monteverde. In 1993, Dr.

Ramadurai became an employee of the Clinic. The employment

contract he signed provided that he would receive an annual salary of

50% of his gross receipts.1 In addition, the contract contained a “non-

compete” clause, or restrictive covenant, which provided that, upon

termination, Dr. Ramadurai “shall not” practice medicine within a

two-mile radius of any Clinic office or at any of the four hospitals

where the Clinic operated, i.e., St. Mary of Nazareth, Norwegian

American, St. Elizabeth, and Sacred Heart (the restricted hospitals),

for a period of three years.

Dr. Mohanty joined the Clinic in July 2000 after he completed

training in nuclear cardiology at Cook County Hospital. When Dr.

Mohanty began his employment with the Clinic he was not yet board

1

The contract was later amended to afford Dr. Ramadurai 55% of his

gross receipts.

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certified in cardiology, had no medical practice of his own and no staff

privileges at any of the restricted hospitals. Pursuant to his

employment contract, Dr. Mohanty received an annual salary of 50%

of his gross receipts, with a guaranteed minimum of $160,000.2 The

contract also contained a restrictive covenant, similar to the one in Dr.

Ramadurai’s contract, which provided that, upon termination of the

agreement, Dr. Mohanty “shall not” practice medicine within a five-

mile radius of any Clinic office or at any of the four restricted

hospitals for a period of five years.

On March 12, 2003, Drs. Mohanty and Ramadurai sent letters to

Dr. Monteverde, serving him with notice of their intention to

terminate their employment with the Clinic after 120 days, in

accordance with their employment contracts. In their letters, Drs.

Mohanty and Ramadurai stated that they were terminating their

employment because Dr. Monteverde breached their employment

contracts by refusing to give them partnership interests in the Clinic

and because Dr. Monteverde was billing under his name for patients

they saw, which caused them to be shortchanged on their bonuses.

In May 2003, prior to leaving the Clinic, Drs. Mohanty and

Ramadurai filed complaints for declaratory relief in the circuit court

of Cook County. In the complaints, they alleged that the restrictive

covenants in their employment contracts should be declared void as

against public policy and unenforceable because Monteverde breached

their employment agreements by various means, including refusing to

give them partnership interests in the Clinic and billing improperly

which caused them to receive less compensation than they were due.

Dr. Mohanty’s complaint further alleged that the restrictive covenant

in his employment agreement was invalid because “the duration of the

restrictive covenant, that is five (5) years, and its geographical limits,

that is five (5) miles, are unnecessary to protect the economic or

2

Dr. Mohanty’s contract was amended on October 10, 2001, to provide

that his annual salary would be 50% of his gross receipts, with a guaranteed

minimum of $200,000, to be paid in monthly installments of $16,666.66. If

50% of his gross receipts exceeded the $200,000 minimum, the remainder

was to be paid in a lump sum “bonus.” The amended contract also calculated

Dr. Mohanty’s “bonus” for the July 1, 2000, through June 30, 2001, fiscal

year to be $65,000.

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business interest of either St. John or Dr. Monteverde and therefore

are excessive, unjust, unreasonable, unlawful, and unenforceable.” The

plaintiffs’ declaratory actions were later consolidated by order of the

court.

Defendants answered the complaints, denying all of plaintiffs’

claims. Defendants averred that no promises had been made to either

Dr. Mohanty or Dr. Ramadurai concerning a partnership interest in

the Clinic. Moreover, defendants contended that, even if oral promises

had been made, the failure to keep such promises would not constitute

a breach of the employment contract. Defendants also denied that its

billing practices were unethical, unprofessional or improper.

Defendants then filed a countercomplaint for declaratory, injunctive

and other relief against the plaintiffs. In addition to seeking

preliminary and permanent injunctions to restrain Drs. Mohanty and

Ramadurai from violating the restrictive covenants in their contracts,

the countercomplaint raised claims of misappropriation and unjust

enrichment and sought a declaration regarding the Clinic’s

responsibility for providing medical malpractice “tail coverage.”

Defendants also filed an emergency motion for a temporary restraining

order (TRO) and preliminary injunction to immediately enjoin the

plaintiffs from further violating the restrictive covenants in their

employment contracts.3

The trial court granted defendants a TRO, which was later

amended to permit Drs. Ramadurai and Mohanty, for a limited time,

to provide critical care to their hospitalized patients. The trial court

also required defendants to post a $100,000 surety bond. The matter

was then set for hearing on whether defendants were entitled to a

preliminary injunction.

Plaintiffs filed answers to defendants’ countercomplaint and also

raised affirmative defenses to defendants’ request for injunctive relief,

alleging, as they had done in their declaratory judgment actions, that

the restrictive covenants were unenforceable. The dates set for hearing

3

In July 2003, Drs. Mohanty and Ramadurai left the Clinic but continued

to practice medicine within the restricted area and see patients at the

restricted hospitals, in violation of the covenants in their employment

contracts.

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on the motion for preliminary injunction were continued from time to

time to permit plaintiffs to conduct extensive discovery, particularly

with regard to defendants’ billing practices. When discovery was

completed, plaintiffs filed a “Trial Brief In Opposition To Counter-

Plaintiffs’ Request For A Preliminary Injunction.” In this document,

plaintiffs restated their position that defendants were not entitled to

injunctive relief because the restrictive covenants were not

enforceable. However, plaintiffs’ argument now centered on three

main points: (1) that they should not be held to the terms of the

restrictive covenant in their contracts because defendants materially

breached the employment contracts by improperly billing for a certain

medical procedure, namely, the myoview test (otherwise referred to

as the thallium stress test), which resulted in decreased revenue for

plaintiffs; (2) that the restrictive covenants in their contracts were

unreasonable because they caused undue hardship to plaintiffs, were

injurious to the public, and were excessive in their temporal scope,

and because defendants had no protectable business interest in patients

who had been referred to plaintiffs from other sources; and (3) that all

restrictive covenants in physician contracts should be held void as

against public policy in Illinois. With regard to this last point, plaintiffs

argued that, even if all restrictive covenants were not void, restrictive

covenants should be held void where the employee terminates the

contract due to illegal or unethical conduct by the employer, whether

or not such conduct amounts to a breach of contract.

In November and December 2003, the trial court held hearings on

whether to grant defendants a preliminary injunction. The hearings

took place over the course of six days, at which time the court heard

the testimony of seven witnesses and received 41 exhibits into

evidence. Subsequently, plaintiffs submitted a “Trial Memorandum of

Law of the Applicable Medicare Rules and Regulations” as additional

support for their claim that defendants had improperly billed Medicare

for the myoview test. Both plaintiffs and defendants also submitted,

in writing, extensive closing argument.

On February 20, 2004, the trial court entered a ruling, denying

defendants’ request for preliminary injunctive relief. Stating on the

record that it had considered all of the evidence and arguments of the

parties, the trial court made the following findings. First, the court

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rejected plaintiffs’ claim that defendants had materially breached the

employment contracts. The court held:

“The Court is not satisfied that the evidence adduced at

hearing proves by a preponderance that the employment

agreements were materially breached.”

The trial court then considered whether the restrictive covenants

in plaintiffs’ contracts were reasonable in geography, time and activity.

In this regard, the court held that the geographic limitations “are well

within the ranges of proof by reported case law.” The court found the

temporal restrictions “somewhat problematic,” not because it believed

them to be excessive, but because of the reasons Dr. Monteverde gave

for imposing them. The court noted that, although Dr. Monteverde

testified that three to five years was the amount of time it took to

develop a referral base, he also testified that the three-year restriction

imposed on Dr. Ramadurai “just came into his mind” and the five-year

restriction was imposed on Dr. Mohanty because Dr. Monteverde “did

not trust him.” The trial court then went on to conclude that a

preliminary injunction should not be granted because the activity

restriction in the restrictive covenant was greater than necessary to

protect the defendants’ interests. The covenants restricted “the

practice of medicine” when the Clinic’s practice specialty was

cardiology. Thus, the trial court found the restriction to be “overly

broad and unreasonable.” The trial court permitted the TRO, which

had remained in effect until that time, to continue for an additional 21

days until defendants filed their appeal.

The appellate court reversed, finding that the restriction on the

practice of medicine within the narrowly drawn geographic limits

would not cause plaintiffs undue hardship and was not greater than

necessary to protect the defendants’ interests. 358 Ill. App. 3d 902.

The appellate court declined plaintiffs’ invitation to declare all

restrictive covenants in medical employment contracts void in Illinois

as against public policy. The court also refused to review plaintiffs’

claim that defendants materially breached the employment contract.

The court held this issue was being raised prematurely because the

appeal was interlocutory, having been taken from the trial court’s

order denying defendants a preliminary injunction. The appellate court

stated, “plaintiffs must wait for a hearing on the merits to determine

if the defendants breached the employment contracts in a material way

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that would void the restrictive covenants.” The cause was remanded

with directions that a preliminary injunction be granted defendants

pending further hearings.

Plaintiffs petitioned this court for leave to appeal (177 Ill. 2d R.

315), which this court granted.

ANALYSIS

In the case at bar, defendants sought, by way of a

countercomplaint, a preliminary injunction to enjoin plaintiffs from

violating the restrictive covenants contained in their employment

contracts. Defendants, as the parties seeking the preliminary

injunction, were required to demonstrate (1) a clearly ascertained right

in need of protection, (2) irreparable injury in the absence of an

injunction, (3) no adequate remedy at law, and (4) a likelihood of

success on the merits of the case. People ex rel. Klaeren v. Village of

Lisle, 202 Ill. 2d 164 (2002); Callis, Papa, Jackstadt & Halloran,

P.C. v. Norfolk & Western Ry. Co., 195 Ill. 2d 356, 365 (2001). “On

appeal, we examine only whether the party seeking the injunction has

demonstrated a prima facie case that there is a fair question

concerning the existence of the claimed rights.” People ex rel. Klaeren

v. Village of Lisle, 202 Ill. 2d at 177, citing Callis, 195 Ill. 2d at 366.

A decision to grant or deny a preliminary injunction is generally

reviewed for an abuse of discretion. Callis, Papa, Jackstadt &

Halloran, P.C. v. Norfolk & Western Ry. Co., 195 Ill. 2d 356 (2001).

However, whether injunctive relief should issue to enforce a restrictive

covenant not to compete in an employment contract depends upon the

validity of the covenant, the determination of which is a question of

law. Retina Services, Ltd. v. Garoon, 182 Ill. App. 3d 851, 856

(1989). See also Woodfield Group, Inc. v. DeLisle, 295 Ill. App. 3d

935, 938 (1998) (“determination of whether a restrictive covenant is

enforceable is a question of law”). Accordingly, we review that

determination de novo. The Agency, Inc. v. Grove, 362 Ill. App. 3d

206, 215 (2005).

Mootness

A court should not decide a case where the occurrence of events

after an appeal has been filed make it impossible for the reviewing

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court to render effectual relief and the judgment would have only an

advisory effect. Berlin v. Sarah Bush Lincoln Health Center, 179 Ill.

2d 1, 7-8 (1997). In the case at bar, it is apparent from the record that

the restrictive covenant in Dr. Ramadurai’s employment contract

prohibited him, upon termination, from practicing medicine within the

restricted area for a period of three years. Because Dr. Ramadurai left

the Clinic in July 2003, that time period has now lapsed. For this

reason, it is appropriate for this court to consider whether the appeal

has become moot with respect to Dr. Ramadurai.

After careful consideration we find that Dr. Ramadurai’s appeal

is not moot. As we stated in Berlin, “where a decision ‘could have a

direct impact on the rights and duties of the parties’ there is life in the

appeal.” Berlin, 179 Ill. 2d at 8, quoting People ex rel. Bernardi v.

City of Highland Park, 121 Ill. 2d 1, 6-7 (1988). In the case at bar,

defendants’ countercomplaint, which raises claims of misappropriation

and unjust enrichment, seeks damages for harm allegedly incurred and

revenues allegedly lost as a result of violations of the restrictive

covenant by Drs. Mohanty and Ramadurai. Consequently, a decision

as to the enforceability of the restrictive covenants could have a direct

impact on Dr. Ramadurai’s rights and obligations in these matters.

Accordingly, we conclude that the appeal is not moot as to Dr.

Ramadurai.

Enforceability of the Restrictive Covenants

In opposition to defendants’ motion for preliminary judgment,

plaintiffs raised various affirmative defenses challenging the validity

and enforceability of the restrictive covenants in their employment

contracts. These claims were rejected by the courts below. Now, in

their appeal before this court, plaintiffs argue once again that

defendants are not entitled to a preliminary injunction to enforce the

restrictive covenants in their employment contracts because the

covenants are not enforceable. Plaintiffs affirmatively challenge the

enforceability of the restrictive covenants, advancing three separate

theories. First, they contend that all restrictive covenants in physician

employment contracts should be held void and unenforceable because

they are against the public policy of this state. Second, plaintiffs

contend that defendants materially breached the employment

contracts, thereby relieving plaintiffs of their obligations under the

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restrictive covenants. Third, plaintiffs contend that the restrictive

covenants in their employment contracts may not be enforced because

they are overly broad in their temporal and activity restrictions and,

thus, unreasonable.

We first address the contention that restrictive covenants in

physician employment contracts should be held void as against public

policy in Illinois. Initially, we note that this court has a long tradition

of upholding the right of parties to freely contract. Vine Street Clinic

v. Healthlink, Inc., 222 Ill. 2d 276 (2006). Consequently, our

decisions have held that a private contract, or provision therein, will

not be declared void as contrary to public policy unless it is “ ‘clearly

contrary to what the constitution, the statutes or the decisions of the

courts have declared to be the public policy’ ”or it is clearly shown

that the contract is “ ‘manifestly injurious to the public welfare.’ ”

Vine Street Clinic v. Healthlink, Inc., 222 Ill. 2d at 300, quoting

Schumann-Heink v. Folsom, 328 Ill. 321, 330 (1927). See also Barr

v. Kelso-Burnett Co., 106 Ill. 2d 520 (1985); Palmateer v.

International Harvester Co., 85 Ill. 2d 124 (1981) (the public policy

of the state is to be found in its constitution and statutes and, when

they are silent, then in its judicial decisions and constant practice of its

governmental officials). We have strictly adhered to the position that

the public policy of the state is not to be determined by “ ‘ “the

varying opinions of laymen, lawyers or judges as to the demands of

the interests of the public.” ’ ” Groome v. Freyn Engineering Co.,

374 Ill. 113, 124 (1940), quoting Zeigler v. Illinois Trust & Savings

Bank, 245 Ill. 180, 193 (1910). As a result, plaintiffs carry a heavy

burden of showing that restrictive covenants in physician employment

contracts are against the public policy of this state.

In attempting to meet this burden, plaintiffs first point to our

decision in Dowd & Dowd, Ltd. v. Gleason, 181 Ill. 2d 460, 482

(1998), wherein we held that, in Illinois, restrictive covenants in

attorney employment contracts are void as a matter of public policy.

Citing to the appellate court decision in Carter-Shields v. Alton

Health Institute, 317 Ill. App. 3d 260 (2000), plaintiffs argue that the

public policy reasons for finding restrictive covenants in physician

employment contracts void are even more compelling than the reasons

advanced with respect to attorney employment contracts. Plaintiffs

provide a laundry list of the possible adverse effects of allowing

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restrictive covenants in physician employment contracts, namely, that

restrictive covenants in physician employment contracts interfere with

the doctor-patient relationship, deny patients the freedom to choose

their own doctor, create barriers to the delivery of quality medical

care, hinder competition, and often force patients to incur the

additional expense of duplicative testing. In addition to these patient

concerns, plaintiffs argue that restrictive covenants place unreasonable

limits on physicians’ autonomy and freedom of movement. Plaintiffs

conclude that our decision in Dowd & Dowd and the appellate court

decision in Carter-Shields provide a strong foundation upon which to

find that covenants restricting skilled professionals from practicing

their trade are contrary to the public policy of this state. We disagree.

The appellate decision in Carter-Shields, upon which plaintiffs

primarily rely, was vacated by this court in Carter-Shields v. Alton

Health Institute, 201 Ill. 2d 441 (2002), and, as such, carries no

precedential weight. Moreover, the appellate decision in Carter-

Shields stands alone in its rejection of long-standing Illinois precedent

on the validity of restrictive covenants in physician employment

contracts. See Prairie Eye Center, Ltd. v. Butler, 329 Ill. App. 3d 293

(2002).

Moreover, in Dowd, our determination that noncompetition

covenants in attorney employment contracts were void was grounded

in the fact that such covenants were in direct “conflict with Rule 5.6”

of the Illinois Rules of Professional Conduct, which gave expression

to important considerations of public policy. Dowd, 181 Ill. 2d at 481-

83. Thus, we held, “it would be inimical to public policy to give effect

to the offending provisions.” Dowd, 181 Ill. 2d at 482-83. In the

present case, there are no similar expressions of public policy which

require us to find restrictive covenants in the employment contracts of

medical practitioners unenforceable in Illinois.

Plaintiffs, however, direct our attention to an opinion of the

AMA’s Council on Ethical and Judicial Affairs, which states:

“Covenants-not-to-compete restrict competition, disrupt

continuity of care, and potentially deprive the public of

medical services. The Council of Ethical and Judicial Affairs

discourages any agreement which restricts the right of a

physician to practice medicine for a specified period of time or

in a specified area upon termination of an employment,

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partnership, or corporate agreement. Restrictive covenants are

unethical if they are excessive in geographic scope or duration

in the circumstances presented, or if they fail to make

reasonable accommodation of patients’ choice of physician.”

(Emphasis added.) AMA Council on Ethical and Judicial

Affairs, Op. E–9.02 (1998).

Plaintiffs contend that AMA Opinion 9.02 provides the necessary

expression of public policy which would permit us to invalidate

restrictive covenants in physician employment contracts. Again, we

must disagree.

AMA Opinion 9.02, while informative, is not the equivalent of an

Illinois statute or rule of professional conduct and, for that reason,

does not provide a clear expression of the public policy of this state.

Thus, AMA Opinion 9.02 cannot dictate the manner in which

restrictive covenants should be construed in Illinois. That having been

said, we point out that Opinion 9.02 does not prohibit, but merely

discourages, restrictive covenants in medical employment contracts.

Furthermore, the AMA’s position on restrictive covenants, as set forth

in Opinion 9.02, is commensurate with the manner in which restrictive

covenants in physician employment contracts are treated in this state.

Historically, covenants restricting the performance of medical

professional services have been held valid and enforceable in Illinois

as long as their durational and geographic scope are not unreasonable,

taking into consideration the effect on the public and any undue

hardship on the parties to the agreement. Cockerill v. Wilson, 51 Ill.

2d 179, 183-84 (1972); Canfield v. Spear, 44 Ill. 2d 49 (1969). Thus,

the AMA provision is no different from the common law requirements

of this state. See Idbeis v. Wichita Surgical Specialists, P.A., 279

Kan. 755, 112 P.3d 81 (2005) (AMA requirements are no different

from common law requirement that restrictive covenants be

reasonable and not adverse to the public welfare).

We are similarly unpersuaded by plaintiffs’ references to other

jurisdictions. Plaintiffs contend that “states such as Colorado,

Delaware and Massachusetts have concluded that physician restrictive

covenants violate public policy.” What they fail to acknowledge,

however, is that in Colorado, Delaware, and Massachusetts restrictive

covenants in medical employment contracts are totally prohibited

based on legislative enactments.

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Plaintiffs’ citation to Murfreesboro Medical Clinic, P.A. v. Udom,

166 S.W.3d 674, 681 (Tenn. 2005), is similarly flawed. Plaintiffs claim

that “Murfreesboro directly supports a holding by this court that

physician restrictive covenants violate public policy.” However, in

Murfreesboro, the Supreme Court of Tennessee held a restrictive

covenant unenforceable because noncompete covenants in physician

employment contracts were, by statute, permitted in only “two limited

circumstances and with closely prescribed restrictions,” which were

inapplicable.

While it is true that some jurisdictions prohibit restrictive

covenants in physician employment contracts on public policy

grounds, our research has been unable to reveal any case in which a

court has altogether outlawed restrictive covenants in physician

employment contracts in the absence of some legislative enactment.

Moreover, the vast majority of jurisdictions follow “the modern

view,” which is that restrictive covenants are enforceable if they are

“supported by consideration, ancillary to a lawful contract, and

reasonable and consistent with the public interest.” F. Tinio,

Annotation, Validity and Construction of Contractual Restrictions on

Right of Medical Practitioner to Practice, Incident to Employment

Agreement, 62 A.L.R.3d 1014, 1020 (1975). Thus, the majority of

jurisdictions employ the same reasonableness standard that this court

has consistently applied when deciding the enforceability of restrictive

covenants in medical employment contracts in Illinois.

As stated earlier, when a party seeks to show that a contract term

is against the public policy of this state, that party bears the burden of

showing that the contract term is “ ‘clearly contrary to what the

constitution, the statutes or the decisions of the courts have declared

to be the public policy’ ”or that the contract is “ ‘manifestly injurious

to the public welfare.’ ” Vine Street Clinic, 222 Ill. 2d at 300, quoting

Schumann-Heink v. Folsom, 328 Ill. 321, 330 (1927). In the case at

bar, plaintiffs have failed to show that physician restrictive covenants

are contrary to the constitution, statutes or judicial decisions of this

state. Nor have they shown that these covenants are manifestly

injurious to the public welfare. Although plaintiffs have offered

reasons for finding that restrictive covenants should be disfavored in

physician employment contracts, countervailing reasons exist which

would militate against any deviation from our long-standing practice

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of finding reasonable restrictive covenants in medical employment

contracts enforceable. Restrictive covenants protect the business

interests of established physicians and, in this way, encourage them to

take on younger, inexperienced doctors. Accordingly, restrictive

covenants can have a positive impact on patient care. We do not

know, and are ill-equipped to determine, what the possible

consequences might be if we were to adopt the sweeping changes

plaintiffs advocate. It is possible that patients would be more adversely

affected if we were to ban reasonable restrictive covenants in

physician employment contracts. For this reason, we believe that

prohibiting restrictive covenants in medical practice contracts is a

decision better left to the legislature, where the competing interests

can be fully aired. Accordingly, plaintiffs’ first claim is rejected.

We now turn to plaintiffs’ second claim–that a prior material

breach of the employment contracts by defendants relieves them of

their obligations under the restrictive covenants.

Under general contract principles, a material breach of a contract

provision by one party may be grounds for releasing the other party

from his contractual obligations. William Blair & Co. v. FI

Liquidation Corp., 358 Ill. App. 3d 324 (2005). This principle was

applied in Galesburg Clinic Ass’n v. West, 302 Ill. App. 3d 1016,

1018 (1999). In Galesburg, a medical association sought to enforce

a noncompete covenant in the partnership agreement when two of the

partners (defendants) quit. The defendants filed a counterclaim

alleging that the association had breached the partnership agreement,

discharging them of their duties under the covenant. The trial court

ruled in the defendants’ favor, finding a material breach by the

association. On appeal, the appellate court affirmed, holding that “a

breach *** can operate to discharge the duties of a covenant not to

compete where the breach is material.” See also C.G. Caster Co. v.

Regan, 88 Ill. App. 3d 280 (1980) (where one party materially

breaches the contract, the restrictive covenant in the contract may no

longer be binding on the other party). In the case at bar, plaintiffs ask

us to apply the reasoning in Galesburg to this case.

Initially, we note that, in the trial court, plaintiffs originally

asserted that defendants breached the plaintiffs’ employment contracts

in a number of ways. However, after discovery was completed,

plaintiffs restricted their argument to one claim–that defendants

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materially breached the employment contracts by improperly billing

Medicare for myoview tests ordered by plaintiffs for their patients.

The trial court rejected plaintiffs’ claim, finding that the evidence

presented by plaintiffs did not establish that defendants breached the

employment contracts. The appellate court, having reversed the trial

court’s denial of the preliminary injunction on other grounds, refused

to consider this issue, holding that plaintiffs “must wait for a hearing

on the merits.” 358 Ill. App. 3d at 910-11.

Plaintiffs contend that the appellate court erred. According to

plaintiffs, the appellate court ignored the fact that “a full evidentiary

hearing in the form of a trial was already held” on the matter. Plaintiffs

maintain that we must consider this claim because a determination on

whether defendants breached the employment contracts is necessary

to a decision on whether the restrictive covenants are enforceable.

Plaintiffs also claim that the trial court’s ruling on the matter of their

breach-of-contract claim involved contract interpretation, which is an

issue of law and, as a result, our review should be de novo.

Defendants, on the other hand, initially argue that plaintiffs failed

to appeal the trial court’s adverse ruling on the breach-of-contract

claim and, thus, have forfeited review of this issue. Putting aside

forfeiture, defendants maintain that the trial court correctly determined

that defendants did not materially breach the employment contracts.

Defendants maintain, however, that the breach of contract issue is a

question of fact and that, on review, we may not disturb the trial

court’s ruling unless it is against the manifest weight of the evidence.

The overriding issue in the appeal at bar is the enforceability of the

restrictive covenants in the employment contracts of Drs. Mohanty

and Ramadurai. Because a prior breach of contract by defendants

could render the restrictive covenants in the employment contracts

unenforceable, we conclude that consideration of the breach of

contract claim is necessary to our determination regarding the

enforceability of the covenants. We agree with defendants that

whether or not a material breach of contract has been committed is a

question of fact and, consequently, the lower court’s determination

will not be disturbed unless it is against the manifest weight of the

evidence. W.E. Erickson Construction, Inc. v. Congress-Kenilworth

Corp., 115 Ill. 2d 119 (1986); see also Borys v. Rudd, 207 Ill. App. 3d

610 (1990).

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It is plaintiffs’ position that defendants breached their employment

contracts by failing to compensate plaintiffs the full amounts to which

they were entitled under the provisions of their contracts. According

to plaintiffs, they were significantly underpaid because of the manner

in which defendants billed Medicare for myoview tests performed at

the Clinic at plaintiffs’ direction.

The record shows that the myoview test (also known as a

myocardial perfusion imaging study) is a diagnostic test used to

determine whether the heart muscle is getting the blood supply it

needs. The Clinic owned and maintained at its offices all of the

equipment necessary to conduct myoview tests. The Clinic also had

on its staff a trained technician who would administer the myocardial

imaging phases of the tests. When conducting a myoview test, the

Clinic’s trained technician would first inject a small amount of

radioactive isotope (thallium) into the patient’s bloodstream and then

take pictures of the patient using a special camera for the initial

“resting phase” of the test. After the resting images were taken, the

patient would take a stress test on a treadmill under the supervision of

a physician. Thereafter, the technician would administer an additional

injection to the patient and repeat the myocardial imaging process.

The images would later be interpreted by the physician.4

In regard to billing for the myoview test, Medicare assigned

separate Current Procedural Terminology Codes (CPT Codes) for the

technical and professional components of the test. According to

defendants’ expert witness, Janet Mazur,5 the technical components

of a procedure, billed under the “TC” CPT Code, are intended to

cover overhead, technician salaries, equipment and equipment

maintenance. See also Central States v. Pathology Laboratories of

Arkansas, P.A., 71 F.3d 1251, 1252 (7th Cir. 1995). The professional

component of a procedure compensates the physician who interprets

the test and is billed under the CPT Code “26.”

4

Apparently, Dr. Mohanty interpreted most of the myoview tests due to

his special training in nuclear cardiology.

5

Mazur is a “coding specialist” with over 30 years of experience in the

health-care field, including CPT Code billing and Medicare reimbursements.

-15-

It is uncontested that when billing Medicare for myoview tests

performed at the Clinic’s offices, the technical components of the test

were billed under Dr. Monteverde’s name, while the professional

component was billed under name of the physician who interpreted the

test. Dr. Monteverde explained that he directed the billing for the

technical component to be billed under his name to defray the costs of

the initial $300,000 investment for the purchase of the myoview

equipment, as well as remodeling costs necessary to accommodate the

equipment. He further explained that Medicare’s reimbursement for

the technical component covered the salary of the licensed technician

who administered the test, as well as the costs of medication, supplies

and other overhead expenses associated with the test. Dr. Monteverde

further testified that he believed it appropriate to bill the technical

component under his name because he was the sole owner of the

Clinic and the myoview testing equipment, as well as the person

responsible for the training and supervision of the technician, who

administered all of the myoview tests at the Clinic, regardless of which

physician ordered the test.

Plaintiffs, nevertheless, contend that Dr. Monteverde’s billing

procedure was improper. Specifically, plaintiffs argue that the

technical component of the myoview test, which accounts for about

70% of the total cost of the test, was wrongly diverted to Dr.

Monteverde and, thus, deprived them of compensation to which they

were entitled under the terms of their employment contract. Plaintiffs’

employment contracts provided that plaintiffs were to receive an

annual salary of 50% of their gross receipts.6 They maintain that their

“gross receipts” should have been calculated based on the total cost

of the myoview tests performed at the Clinic on their patients, not just

the professional component.

The employment contracts of Drs. Mohanty and Ramadurai

provide: “Employee shall be paid as follows for his work: 50% of his

gross receipts.” (Emphasis added.) At the hearings conducted by the

trial court, defendants argued that the technical component of the

myoview tests did not constitute Dr. Mohanty’s or Dr. Ramadurai’s

“work” and, thus, there was no violation of the employment contract.

6

Dr. Ramadurai’s contract was amended at some point to afford him 55%

of his gross receipts.

-16-

It was necessary, therefore, for the trial court to resolve the question

of whether the technical components of the myoview tests were part

of plaintiffs’ “work.”

Plaintiffs proffered the testimony and report of an expert to

support their contention that they were entitled to a share in the total

amount charged to Medicare for the myoview test. However,

defendants challenged the qualifications of plaintiffs’ expert and the

trial court barred this witness’ testimony. As a result, plaintiffs

position is largely unsupported.

Defendants’ expert, on the other hand, provided strong testimony

in defense of defendants’ billing practices. According to defendants’

expert, Janet Mazur, billing for the technical component does not

include any amounts for physician services. In a detailed report,

Mazur explained the formulas used by Medicare to determine

“Physician Work Relative Value Units” which is a reflection of a

physician’s “work” for a particular CPT Code. According to Mazur,

the “TC” CPT Codes for the myoview test all carry a Physician Work

Relative Value Unit of zero. Thus, Mazur concluded that “the

technical component of these tests, and corresponding payments for

each component, does not encompass physician work.”

In light of the evidence presented by defendants’ expert, we

cannot say that it was against the manifest weight of the evidence for

the trial court to determine that a material breach of contract was not

established. We affirm the trial court’s ruling on this matter and find

that, because plaintiffs have not carried their burden of proving a

breach of contract by defendants, plaintiffs have not shown why they

should be relieved of their obligations under the restrictive

noncompete covenants in their contracts. Accordingly, plaintiffs’

breach-of-contract claim cannot serve as a basis upon which to deny

defendants a preliminary injunction.

Plaintiffs raise as their third and final issue whether the restrictive

covenants in their employment contracts are unenforceable because

they are unreasonably overbroad in their temporal and activity

restrictions. The restrictive covenant in Dr. Ramadurai’s contract

imposed a three-year restriction on his practice of medicine within a

two-mile radius of the Clinic’s offices. The restrictive covenant in Dr.

Mohanty’s contract limited his ability to practice medicine for five

years within a five-mile radius of the Clinic’s offices.

-17-

As noted earlier in this opinion, this court has a long tradition of

upholding covenants not to compete in employment contracts

involving the performance of professional services when the

limitations as to time and territory are not unreasonable. Cockerill v.

Wilson, 51 Ill. 2d 179, 183-84 (1972); Canfield v. Spear, 44 Ill. 2d 49

(1969); Bauer v. Sawyer, 8 Ill. 2d 351 (1956). “ ‘In determining

whether a restraint is reasonable it is necessary to consider whether

enforcement will be injurious to the public or cause undue hardship to

the promisor, and whether the restraint imposed is greater than is

necessary to protect the promisee.’ ” House of Vision, Inc. v. Hiyane,

37 Ill. 2d 32, 37 (1967), quoting Bauer v. Sawyer, 8 Ill. 2d 351, 355

(1956).

The trial court, when considering the reasonableness of the

covenants here, ruled that the activity restriction was unreasonably

overbroad because the restriction on “the practice of medicine” was

greater than necessary to protect the interests of defendants, who

specialized in the practice of cardiology. The appellate court rejected

this ruling, holding:

“Based on the testimony, it is not a greater restraint than

necessary to protect the defendants. Dr. Ramadurai pointed

out, as a doctor, he is licensed to practice medicine, not just

his specialties. Just as Dr. Monteverde saw patients for

conditions unrelated to internal medicine or cardiology, the

plaintiffs’ specialties do not prevent them from seeing patients

in other areas of medicine, if they so chose, placing them in

competition with the defendants.” 358 Ill. App. 3d at 908.

In addition, the appellate court found that no undue hardship

would accrue to plaintiffs as a result of the covenants because: “They

are free to practice medicine outside the five-mile limit, which, given

the heavily populated Chicago metropolitan area, would not deprive

them of employment.” 358 Ill. App. 3d at 908.

Plaintiffs contest the correctness of the appellate court’s ruling and

ask us to affirm the circuit court’s judgment on this point. We,

however, find the appellate court’s reasoning to be persuasive and,

accordingly, affirm its ruling.

Under the circumstances of this case, the restriction on the

“practice of medicine” is not unreasonable. Cardiology, like other

specialties, is inextricably intertwined with the practice of medicine.

-18-

For this reason, restrictive covenants precluding the practice of

medicine against physicians who practice a specialty have been upheld

as reasonable. See Canfield v. Spear, 44 Ill. 2d 49 (1969)

(dermatologist); Prairie Eye Center, Ltd. v. Butler, 329 Ill. App. 3d

293 (2002); Retina Services, Ltd. v. Garoon, 182 Ill. App. 3d 851

(1989) (ophthalmologists). Thus, we find that the restraint on the

practice of medicine, here, was not greater than necessary to protect

defendants’ interests. This is particularly so because the restriction on

plaintiffs is in effect only within a narrowly circumscribed area of a

large metropolitan area. As the appellate court noted, the two- and

five-mile restrictions will not cause plaintiffs any undue hardship.

Moreover, plaintiffs do not suggest that a more narrowly drawn

activity restriction would have been practicable.

Next, plaintiffs argue, as they did in the appellate court below, that

the temporal restrictions found in their covenants are unreasonable

and that the trial court held them to be so. Like the appellate court,

however, we find plaintiffs’ argument to be factually and substantively

incorrect.

The trial court found the temporal restrictions to be “problematic.”

The trial court acknowledged that there was evidence in the record

which would support a finding that the three- and five-year restrictions

were reasonable, but then found it “significant” that Dr. Monteverde

testified that the three-year restriction for Dr. Ramadurai “just came

into his mind” and the five-year restriction was imposed on Dr.

Mohanty because Dr. Monteverde did not trust him. It does not

appear, however, that the trial court actually concluded that the

temporal restrictions were unreasonable.

In any event, we do not agree that Dr. Monteverde’s candid

remarks are cause for concern. Courts, when assessing the

reasonableness of restrictive covenants, are to apply an objective

standard, informed by the individual facts of the case. Thus, Dr.

Monteverde’s personal, subjective motivations for imposing the

particular temporal restrictions are irrelevant as long as the limitations

satisfy an objective standard of reasonableness. We find that they do.

Record evidence indicated that it took more than 10 years for St.

John Clinic to establish itself as a successful cardiology practice. Dr.

Monteverde testified that it took a minimum of three to five years to

develop a referral base and that during the time that Drs. Ramadurai

-19-

and Mohanty worked for the Clinic, nearly all of their referrals had

come through the Clinic. Further, Dr. Monteverde testified that

from1989, when Dr. Ramadurai was hired, to 2001, when Dr.

Mohanty was hired, the practice of cardiology had become much more

competitive. There were more cardiologists in the area, which meant

that a greater number of doctors were available to serve a limited

number of cardiology patients in the area. There is nothing to indicate

that the trial court did not find Dr. Monteverde’s testimony to be

credible. More importantly, plaintiffs have never presented any

evidence to refute it. We cannot say, therefore, that the three- and

five-year restrictions are unreasonable under the circumstances of this

case. We note, too, that similar restrictions in other restrictive

covenants have been upheld as reasonable. Cockerill v. Wilson, 51 Ill.

2d 179 (1972) (five-year restriction); Canfield v. Spear, 44 Ill. 2d 49

(1969) (three years); Bauer v. Sawyer, 8 Ill. 2d 351 (1956) (five-year

restriction).

Finally, plaintiffs argue that, with their absence from the Clinic, the

Clinic will be unable to handle its patient load. This argument is

unresponsive to the issue here–whether the temporal restriction is

greater than necessary to protect defendants’ interests. The measure

of the potential harm to the public caused by the restriction is whether

there exists a sufficient number of cardiologists in the area to meet

patient needs. Plaintiffs do not contest defendants’ evidence on this

point. Thus, we cannot say that barring plaintiffs from the practice of

medicine within the restricted area for the stated time periods would

seriously diminish the number of cardiologists available to provide the

necessary patient care. Therefore, we conclude that the three- and

five-year time restrictions on the plaintiffs’ ability to practice medicine

within the limited geographical area was reasonable and necessary to

protect the Clinic’s interests.

CONCLUSION

In opposition to defendants’ motion for a preliminary injunction,

plaintiffs contested the validity and reasonableness of the restrictive

covenants contained in their employment contracts. We have rejected

each of plaintiffs’ arguments and, as a result, conclude that defendants

are entitled to a preliminary injunction to enforce the restrictive

-20-

covenants contained in plaintiffs’ employment contracts. We affirm the

appellate court’s judgment.

Appellate court judgment affirmed.

JUSTICE KARMEIER, specially concurring:

I fully concur in the court’s judgment. I join its opinion with the

understanding that it should not be read as altering any of the normal

standards governing cases of this kind.

As the appellate court recognized, this is an interlocutory appeal

as of right brought pursuant to Supreme Court Rule 307(a)(1) (188

Ill. 2d R. 307(a)(1)) from a judgment of the circuit court denying

defendants’ motion for a preliminary injunction. It is well established

that the purpose of a preliminary injunction is not to resolve the merits

of a case, but to preserve the status quo until the merits can be

decided. Callis, Papa, Jackstadt & Halloran, P.C. v. Norfolk &

Western Ry. Co., 195 Ill. 2d 356, 365 (2001). Consistent with the

provisional nature of this remedy, a party seeking preliminary

injunctive relief is not required to make out a case which would entitle

him to final judgment; rather, he need only show that he raises a “fair

question” and that the court should preserve the status quo until it can

decide the case on the merits. Buzz Barton & Associates, Inc. v.

Giannone, 108 Ill. 2d 373, 382 (1985).

The issuance of a preliminary injunction is an extreme remedy and

should not be undertaken unless an emergency exists and serious harm

would result if the injunction were not issued. As my colleagues

indicate, the party seeking a preliminary injunction must establish that

(1) a clearly ascertained right in need of protection exists, (2)

irreparable harm will occur in the absence of an injunction, (3) there

is not an adequate remedy at law, and (4) there is a likelihood of

success on the merits. Callis, Papa, Jackstadt & Halloran, P.C., 195

Ill. 2d at 365-66. The decision to grant or deny a preliminary

injunction rests within the sound discretion of the trial court and on

review the decision will not be disturbed absent an abuse of discretion.

People ex rel. Klaeren v. Village of Lisle, 202 Ill. 2d 164, 177 (2002).

In this case, there is no dispute regarding elements (1), (2) and (3),

the existence of a clearly ascertainable right in need of protection,

irreparable injury and the lack of an adequate remedy at law. The sole

-21-

issue is whether defendants, who were seeking the preliminary

injunction, made a fair showing that the restrictive covenants were

valid and enforceable and that they were therefore likely to succeed on

the merits of their claim against plaintiffs.

The majority correctly points out that the validity of covenants not

to compete contained in employment contracts is a question of law

(see Retina Services, Ltd. v. Garoon, 182 Ill. App. 3d 851, 856

(1989); see also Woodfield Group, Inc. v. DeLisle, 295 Ill. App. 3d

935, 938 (1998) (“determination of whether a restrictive covenant is

enforceable is a question of law”)) which we review de novo (The

Agency, Inc. v. Grove, 362 Ill. App. 3d 206, 215 (2005)). The

situation here, however, is more complex. That is because plaintiffs’

challenge to the enforceability of the restrictive covenants includes, by

way of an affirmative defense, the claim that defendants had breached

the employment contracts of which the covenants were a part.

Whether a breach of contract has occurred is not a legal question

subject to de novo review. It is a question of fact which will not be

disturbed unless the finding is against the manifest weight of the

evidence. See Bunge Corp. v. Northern Trust Co., 252 Ill. App. 3d

485, 499 (1993).

Normally, affirmative defenses such as breach of contract may not

be litigated on the merits in the context of a hearing on a motion for

preliminary injunctive relief. See, e.g., Falcon, Ltd. v. Corr’s Natural

Beverages, Inc., 165 Ill. App. 3d 815, 820 (1987). The reason for this

rule, as the appellate court recognized, is that resolution of such

matters requires the determination of controverted rights and

resolution of matters bearing on the merits of the underlying case.

Under established precedent, those are not appropriate objectives for

proceedings seeking preliminary injunctive relief. As I have already

indicated, preliminary injunctions precede hearings on the merits, and

their purpose is not to decide the merits of a case, but to maintain the

status quo and prevent a threatened wrong until the merits can be

decided.

Although the majority makes no attempt to reconcile its approach

with these principles, I believe that it has acted properly. What sets

this litigation apart is that instead of deferring the hearing on the

merits of the breach of contract claim until the trial, both plaintiffs and

defendants elected to make an extensive evidentiary record on the

-22-

question. In effect, the hearing on the breach of contract defense was

treated as the actual trial on that issue. The situation is directly

analogous to one where the parties expressly agree that the evidence

presented in connection with a preliminary injunction should stand as

the record for purposes of entering final judgment on the merits. See,

e.g., City of Chicago v. Pooh Bah Enterprises, Inc., No. 99804

(October 5, 2006). Under these circumstances, the parties cannot

possibly complain that addressing the breach of contract issues

exceeds the permissible scope of our inquiry in this case. I note,

moreover, that none of the parties has given any indication that

additional relevant evidence exists that has not already been

introduced. To refrain from deciding the breach of contract issues

notwithstanding the existence of the fully developed evidentiary

record already before us would serve no useful purpose.

For the foregoing reasons, I concur in court’s the judgment.

Subject to the points raised in this separate concurrence, I also join its

opinion.

JUSTICE GARMAN joins in this special concurrence.

JUSTICE FREEMAN, concurring in part and dissenting in part:

The appellate court upheld the physician restrictive covenants in

the present case, and this court affirms. In so doing, my colleagues in

the majority give short shrift to the essential issue of patient care. I

write separately because fuller consideration of the issue of patient

care is crucial to an enlightened resolution of the parties’ contentions.

The issue of patient care is fraught with opposing public policy

considerations. Further, the issue of patient care is so intertwined with

the enforceability of physician restrictive covenants that a blanket

prohibition thereof must come from the legislature and not the courts.

Therefore, I agree with my colleagues’ conclusion on this point.

Nevertheless, because consideration of patient care is so important in

enforcing individual physician restrictive covenants, including not only

the patient’s freedom to choose a physician but also the patient’s

interests in maintaining an established physician-patient relationship,

I believe that the prevailing analysis is inadequate. In my view, the

court today lets pass the opportunity to revisit this important issue and

modify our analysis.

-23-

Accordingly, I propose a modified analysis that more appropriately

considers the fundamental element of patient care. The record before

us does not contain sufficient evidence to establish this crucial

consideration. Therefore, I cannot uphold these restrictive covenants.

Rather, I would reverse the judgments below and remand the cause to

the circuit court for additional fact finding.

I. BACKGROUND

A physician restrictive covenant is a clause typically found in

employment agreements between physicians and their employers.

Usually, employers require physicians to sign such covenants prior to

beginning their practice. The contractual clauses obligate physicians

to refrain from engaging in or establishing a competitive medical

practice within a specified geographic region for a specified period of

time subsequent to the conclusion or termination of the physician’s

employment. The restrictive covenant typically will also prohibit a

physician from treating patients at hospitals within the same

geographic region. S. Malloy, Physician Restrictive Covenants: The

Neglect of Incumbent Patient Interests, 41 Wake Forest L. Rev. 189,

189-90 (2006); accord D. Loeser, The Legal, Ethical, and Practical

Implications of Noncompetition Clauses: What Physicians Should

Know Before They Sign, 31 J.L. Med. & Ethics 283, 283-84 (2003);

P. Berg, Judicial Enforcement of Covenants Not To Compete

Between Physicians: Protecting Doctors’ Interests At Patients’

Expense, 45 Rutgers L. Rev. 1, 2-3 (1992). Terms such as “restrictive

covenant,” “noncompete agreement,” and “covenant not to compete”

are synonymous and used interchangeably. 41 Wake Forest L. Rev. at

189 n.2; 45 Rutgers L. Rev. at 2 n.9. In the present case, the appellate

court, inter alia: (1) found that plaintiffs’ postemployment restrictive

covenants were reasonable (358 Ill. App. 3d 902, 906-09), and (2)

rejected plaintiffs’ contention that physician postemployment

restrictive covenants in Illinois are void as against public policy. 358

Ill. App. 3d at 911.

II. ANALYSIS

The purpose of a preliminary injunction is to preserve the status

quo pending a decision on the merits of a cause. A preliminary

injunction is an extreme remedy that a court should employ only in

-24-

situations where an emergency exists and serious harm would result

if the injunction is not issued. Callis, Papa, Jackstadt & Halloran,

P.C. v. Norfolk & Western Ry. Co., 195 Ill. 2d 356, 365 (2001). As

my colleagues in the majority observe, a party seeking a preliminary

injunction must establish that: (1) a clearly ascertained right in need of

protection exists; (2) irreparable harm will occur without the

injunction; (3) there is no adequate remedy at law for the injury; and

(4) there is a likelihood of success on the merits. Slip op. at 7; Callis,

195 Ill. 2d at 365-66. The decision to grant or deny a preliminary

injunction rests within the sound discretion of the circuit court, whose

decision will not be disturbed on review absent an abuse of discretion.

Callis, 195 Ill. 2d at 366.

In this case: “The sole issue is whether defendants, who were

seeking the preliminary injunction, made a fair showing that the

restrictive covenants were valid and enforceable and that they were

therefore likely to succeed on the merits of their claim against

plaintiffs.” Slip op. at 22 (Karmeier, J., specially concurring, joined by

Garman, J.). Whether a restrictive covenant is valid and enforceable

depends on the reasonableness of its terms, which is a question of law

for the court to determine. Tarr v. Stearman, 264 Ill. 110, 118-19

(1914); Lanzit v. J.W. Sefton Manufacturing Co., 184 Ill. 326, 330

(1900); see McRand, Inc. v. van Beelen, 138 Ill. App. 3d 1045, 1051

(1985); Image Supplies, Inc. v. Hilmert, 71 Ill. App. 3d 710, 712

(1979). Accordingly, our review is de novo. Woods v. Cole, 181 Ill.

2d 512, 516 (1998).

A. Prohibition of All Physician Restrictive Covenants

Plaintiffs ask this court to hold that all physician restrictive

covenants are void in Illinois as against public policy. Of course,

physicians enjoy the freedom of contract. Slip op. at 9. However,

these agreements are not immune from state regulation.

“It is too well settled to require discussion at this day that

the police power of the States extends to the regulation of

certain trades and callings, particularly those which closely

concern the public health. There is perhaps no profession more

properly open to such regulation than that which embraces the

practitioners of medicine.” Watson v. Maryland, 218 U.S.

173, 176, 54 L. Ed. 987, 989, 30 S. Ct. 644, 646 (1910).

-25-

It is elementary that “a state has broad power to establish and enforce

standards of conduct within its borders relative to the health of

everyone there. It is a vital part of a state’s police power. The state’s

discretion in that field extends naturally to the regulation of all

professions concerned with health.” Barsky v. Board of Regents of the

University of the State of New York, 347 U.S. 442, 449, 98 L. Ed.

829, 838, 74 S. Ct. 650, 654 (1954). The state’s police power in the

area of health is broad and “is sufficient to justify, in proper

circumstances, uncompensated deprivation of personal liberty as well

as deprivation of property. [Citation.] The States have wide regulatory

power with respect to the practice of health care professions.”

Methodist Medical Center of Illinois v. Ingram, 82 Ill. 2d 511, 522-

23 (1980) (and cases cited therein).

In support of this contention, plaintiffs present several

considerations relating to patient care. However, instead of discussing

the impact of physician restrictive covenants on the essential issue of

health care, my colleagues in the majority curtly recite plaintiffs’

patient-care considerations and unduly discount them simply as a

“laundry list.” Slip op. at 9. Indeed, without any discussion of

plaintiffs’ patient-care considerations, the court ultimately concludes

that plaintiffs have not “shown that these covenants are manifestly

injurious to the public welfare.” Slip op. at 12. I respectfully disagree.

Based on the essential nature of health care in our society, I

request the patience of my colleagues in the majority, as I look beyond

what they characterize as a “laundry list” to more fully discuss the

crucial relation between physician restrictive covenants and patient

care. I am of the opinion that a strong case exists for abolishing all

physician restrictive covenants as being against public policy.

However, I agree that this decision is for the General Assembly to

make.

The enforcement of physician restrictive covenants impedes the

delivery of quality medical care in several ways. The essential

ingredients of quality medical primary care include continuity of care,

interpersonal communications, longitudinality of the physician-patient

relationship, patients’ preference to see their regular physician, and the

accumulation of physician knowledge about the patient. When

physician restrictive covenants are enforced, they ultimately result in

the severing of physician-patient relationships. Studies have addressed

-26-

the involuntary termination of those relationships and the concomitant

impact of forced discontinuity of care. These studies reveal that the

disruption caused by enforcing physician restrictive covenants results

in increased costs of care, decreased quality of care, and decreased

patient satisfaction. A. Di Dio, The Legal Implications of

Noncompetition Agreements in Physician Contracts, 20 J. Legal Med.

457, 475 (1999).

As a result of the forced severing of the physician-patient

relationship due to the enforcement of a physician restrictive covenant,

the patient must search for a new physician to tend to the patient’s

medical needs. Of course, this new physician must now learn about the

patient to provide effective treatment. Physicians who know less about

their patients will more likely order laboratory tests. In turn, decreased

patient comfort levels with new physicians impede interpersonal

communications and the new physicians’ accumulation of knowledge.

For patients who see multiple physicians for multiple medical

problems, coordination of care is paramount. When these patients are

compelled to change physicians, coordination of care decreases.

Forced discontinuity of patient care results in: more frequent physician

visits, laboratory tests, hospitalizations, and surgical procedures;

increased utilization of speciality services and hospital emergency

rooms; and increased emergency hospital admissions and longer

hospital stays. 20 J. Legal Med. at 475-76. All of this results in

increased health-care costs and decreased patient satisfaction.

Further, the enforcement of physician restrictive covenants “is

contrary to medical research that demonstrates that continuity in the

doctor-patient relationship fosters the delivery of quality health care

and that the involuntary termination of this relationship may have

lasting, negative effects on patients.” 45 Rutgers L. Rev. at 31. Long-

term, continuous relationships between physicians and patients impact

positively on many aspects of health care. A longstanding, trusting

physician-patient relationship often improves a physician’s diagnostic

abilities and increases the likelihood that the patient will comply with

prescribed therapy. Providing continuity is particularly important to

the treatment of certain patients such as children and the elderly, and

for certain medical conditions such as psychiatric disorders. Patients

having such relationships with primary-care physicians are less likely

to seek treatment in hospital emergency rooms than patients who have

-27-

no such relationship. Also, patients who have ongoing relationships

with their physicians have considerably shorter hospitalizations and

intensive-care unit stays than patients who lack such relationships. 45

Rutgers L. Rev. at 31-34.

Further, it cannot be ignored that this country suffers from a

shortage of primary-care physicians, which is obviously an additional

threat to a patient’s receiving adequate health care. Some communities

are truly endangered by the shortage of available physicians caused by

the enforcement of physician restrictive covenants. 41 Wake Forest L.

Rev. at 212-13.

The enforcement of physician restrictive covenants harms not only

patients. “While forced discontinuity of care may have detrimental

effects for the patient when it occurs because of a restrictive covenant,

it is equally troublesome for the physician.” 41 Wake Forest L. Rev.

at 207. The enforcement of physician restrictive covenants deny

patients the right to choose their own physicians. This patient care

consideration implicates a physician’s ethical obligations.

In 1933, the American Medical Association (AMA) first addressed

the issue of physician restrictive covenants. The AMA declared that

contractual provisions that prevented the free choice of a physician

were unethical. However, in 1960, the AMA Judicial Council, which

is responsible for interpreting and recommending changes to the AMA

constitution, bylaws, and ethical principles (45 Rutgers L. Rev. at 6

n.23), retreated from this position. The 1960 opinion stated that there

was no ethical proscription against a reasonable restrictive covenant,

if knowingly made and understood. In 1971, the AMA adopted a

resolution that echoed the position of the 1960 opinion. 45 Rutgers L.

Rev. at 6-7.

Subsequent to 1960, official statements of the AMA have

repeatedly criticized physician restrictive covenants as being

antagonistic to quality health care, yet have expressed toleration of

reasonable noncompetition agreements. In 1971, the Judicial Council

recommended barring physician restrictive covenants in all but

exceptional circumstances. The Council explained that it

“recognizes social and professional conditions have

changed over the years. While there may once have been some

need for restrictive covenants in agreements between

physicians, the Council believes that existing socio-economic

-28-

conditions leave little or no justification for restrictive

covenant arrangements. In the opinion of the Council, the use

of restrictive covenants in an agreement between or among

physicians should be entered into only under the most unusual

circumstances and then only after those circumstances have

been found by the local medical society to require the

adoption of such a provision in order to protect the public and

the profession in the particular situation.” 45 Rutgers L. Rev.

at 8, citing AMA, Proceedings of the House of Delegates,

Report of Judicial Council 124 (1972).

The Judicial Council has also opined:

“ ‘Free choice of physicians is the right of every individual.

One may select and change, at will, one’s physicians, or may

chose a medical care plan such as that provided by a closed

panel or group practice or health maintenance or service

organization. The individual’s freedom to select a preferred

system of health care and free competition among physicians

and alternative systems of care are prerequisites of ethical

practice and optimal patient care.’ ” 31 J.L. Med. & Ethics at

286, quoting AMA Council on Ethical and Judicial Affairs,

Op. E–9.06 (1977).

In 1980, the AMA declared that physician restrictive covenants, while

not unethical, are not “in the public interest.” 45 Rutgers L. Rev. at 9.

Further, in 1993, the Judicial Council recognized the consensual

and highly personal nature of the physician-patient relationship.

“ ‘The patient has the right to continuity of health care.

The physician has an obligation to cooperate in the

coordination of medically indicated care with other health care

providers treating the patient. The physician may not

discontinue treatment of a patient as long as further treatment

is medically indicated, without giving the patient reasonable

assistance and sufficient opportunity to make alternative

arrangements for care.’ ” 31 J.L. Med. & Ethics at 286,

quoting AMA Council on Ethical and Judicial Affairs, Op.

E–10.01 (1993).

The AMA continues to be concerned with continuity of patient care

and its disruption by enforcement of physician restrictive covenants.

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The Judicial Council’s current opinion on physician restrictive

covenants states:

“ ‘Covenants not to compete restrict competition, disrupt

continuity of care, and potentially deprive the public of

medical services. The Council on Ethical and Judicial Affairs

discourages any agreement which restricts the right of a

physician to practice medicine for a specified period of time or

in a specified area upon termination of an employment,

partnership or corporate agreement. Restrictive covenants are

unethical if they are excessive in geographic scope or duration

in the circumstances presented, or if they fail to make

reasonable accommodation of patients’ choice of physician.’ ”

31 J.L. Med. & Ethics at 287, quoting AMA Council on

Ethical and Judicial Affairs, Op. E–9.02 (1998).

Although the AMA currently accepts reasonable physician restrictive

covenants, the AMA remains critical of them.

These AMA-recognized ethical obligations of physicians, as they

relate to patients’ freedom of choice, do not result in a virtual

involuntary servitude for physicians. After all, a physician may

voluntarily retire or move from a community. However, the AMA has

recently spoken “directly to physicians’ higher obligations to patients

versus themselves or other groups:

“ ‘The practice of medicine, and its embodiment in the

clinical encounter between a patient and a physician, is

fundamentally a moral activity that arises from the imperative

to care for patients and alleviate suffering. The relationship

between patient and physician is based on trust and gives rise

to physicians’ ethical obligations to place patients’ welfare

above their own self-interest and above obligations to other

groups, and to advocate for their patients’ welfare.’ ” 31 J.L.

Med. & Ethics at 286-87, quoting AMA Council on Ethical

and Judicial Affairs, Report 1–A–01 (2001).

To state the obvious: the physician-patient relationship is unlike most

other business relationships. Therefore, it should not be treated in an

identical manner. See, e.g., York, 222 Ill. 2d at 185-201 (recognizing

uniqueness of physician-patient relationship, court treated element of

reliance in apparent agency analysis differently in health-care context

than in other contexts). When a physician must terminate his or her

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relationship with a patient, the patient may suffer the consequences

physically. In most other cases, the client who is denied the services

of the professional is harmed only financially. 41 Wake Forest L. Rev.

at 208.

The antagonism between physician restrictive covenants and the

ethical obligations of physicians is recognized:

“[AMA] Official Guidelines state that once a physician-patient

relationship is formed, the physician has a legal and ethical

duty to continue providing care as long as the patient needs it.

When a physician must terminate the patient relationship due

to a restrictive covenant, she must simultaneously fulfill this

ethical obligation. Doing so requires that the physician give

reasonable notice of termination, as well as sufficient

opportunity to find an alternative provider. The AMA

provides steps that a physician should follow in terminating

the relationship, including providing the patient with a reason

for terminating the relationship, continuing to provide

treatment while the patient attempts to locate a new provider,

recommending a new provider at the patient’s request, and

transferring the patient’s files to another physician only with

the patient’s permission. Many physicians are prohibited from

contacting their former patients under restrictive covenants

and are therefore unable to fulfill these legal and ethical

obligations.” 41 Wake Forest L. Rev. at 207-08.

Physicians have an ethical duty to put the welfare of their patients

above their own. A physician restrictive covenant undermines those

ethics when it places the employers’ financial interests above patients’

interests. 41 Wake Forest L. Rev. at 208.

Rather than discuss the patient-care considerations as they relate

to physician restrictive covenants, the court offers its own justification

for such agreements: “Restrictive covenants protect the business

interests of established physicians and, in this way, encourage them to

take on younger, inexperienced doctors.” Slip op. at 12-13. However:

“No empirical evidence exists that restrictive covenants are needed to

protect physician/employers’ economic interests. Indeed, one medical

commentator has concluded that these provisions are usually not

economically justified. Richard P. Bergen, Practical Considerations

on Restrictive Covenants, 203 JAMA 197, 198 (1968).” 45 Rutgers

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L. Rev. at 31 n.137. Another commentator recently opined that,

ordinarily, the revenue generated by the physician-employee should

substantially exceed the cost to the employer of employing the

physician. Thus, the employer is usually well compensated for the

benefits it provides to the physician during the employment. Arguably

the employer also profits from the long-term benefits provided to the

physician. “As the physician gains knowledge, and enhances his or her

personal reputation, the employer benefits by association. Those

benefits do not just disappear when the physician departs; the

community may continue to associate positive experiences or

outcomes with the employer, and, hence, the value of the employer’s

goodwill remains enhanced.” 31 J.L. Med. & Ethics at 190.

Notwithstanding the above, I am not unsympathetic to the

legitimate business interests that employers such as defendants wish

to protect. I note, however, that other means exist to protect these

interests, which do not negatively impact or unduly burden patient

care or the ethical obligations of physicians. For example, many

physician restrictive covenants give the contracting physician the

option of paying liquidated damages in the alternative to abiding by

the activity, geographic, and temporal restrictions of the covenant.

Some commentators argue that these damages are less harmful to

physicians and the physician-patient relationship than the enforcement

of the restrictive covenant through injunctive relief. 41 Wake Forest

L. Rev. at 219. Moreover, the solitary suggestion that my colleagues

in the majority offer to justify physician restrictive covenants focuses

on “business interests” and lacks any consideration of physicians’

ethical obligations to patients.

A strong case exists for a blanket abolition of all physician

restrictive covenants in Illinois as being void against public policy.

However, I agree that such a decision is properly left to the General

Assembly. Slip op. at 13.

In the exercise of the police power, the State has the right to

regulate any and all occupations for the protection of the lives and

health of the people. All measures and regulations for the public health

that do not infringe upon constitutional rights are within the scope of

the police power. Within constitutional limitations, the General

Assembly is the sole judge of what laws shall be enacted for the

protection of the public health, and so long as such laws do not invade

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inherent or constitutional rights, the determination of the General

Assembly is conclusive. People v. Witte, 315 Ill. 282, 285 (1924);

People v. Kane, 288 Ill. 235, 237-38 (1919).

Despite the long-established recognition that measures regulating

health-care professionals must ultimately issue from the General

Assembly, plaintiffs contend that this court should prohibit physician

restrictive covenants in Illinois for the same reasons that this court

prohibited attorney restrictive covenants in this state. In Dowd &

Dowd, Ltd. v. Gleason, 181 Ill. 2d 460 (1998), this court held that

attorney restrictive covenants were void as against the public policy

underlying Rule 5.6(a) of the Illinois Rules of Professional Conduct

(134 Ill. 2d R. 5.6(a)). The rule provides that a lawyer shall not

participate in offering or making a partnership or employment

agreement that restricts the rights of a lawyer to practice after

termination of the relationship. 134 Ill. 2d R. 5.6(a). This court

observed that Rule 5.6(a) “is designed both to afford clients greater

freedom in choosing counsel and to protect lawyers from onerous

conditions that would unduly limit their mobility.” Dowd, 181 Ill. 2d

at 481. Plaintiffs argue that physician restrictive covenants, like

attorney restrictive covenants, limit both patients’ freedom in choosing

physicians and physicians’ professional autonomy.

This comparison fails for at least two reasons. First, Dowd

implicated this court’s unique and inherent responsibility for regulating

the conduct of attorneys. This court has the sole and inherent power

to define and regulate the practice of law in this state. Further, the

power to prescribe rules governing attorney conduct rests solely in

this court. Consistent with this exclusive power, this court has

adopted the Rules of Professional Conduct (134 Ill. 2d Rules, art.

VIII). These rules regulate the practice of law and the conduct of

lawyers, and are intended to safeguard the public and assure the

integrity of our legal system. These regulatory provisions assure that

lawyers practice law ethically and with competence. Ford Motor

Credit Co. v. Sperry, 214 Ill. 2d 371, 382-83 (2005); People ex rel.

Brazen v. Finley, 119 Ill. 2d 485, 492-94 (1988). However, the

legislature may enact statutes that are in aid of, and do not supersede

or detract from, the power of this court to control the practice of law.

People ex rel. Chicago Bar Ass’n v. Goodman, 366 Ill. 346, 349

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(1937); see, e.g., 705 ILCS 205/0.01 et seq. (West 2004) (Attorney

Act).

In contrast, regulations governing physicians do not contain any

restrictions similar to Rule 5.6(a) of the Illinois Rules of Professional

Conduct. Neither Illinois statutes, nor the regulations of the Illinois

Department of Professional Regulation, in any way prohibit physician

restrictive covenants. See Karlin v. Weinberg, 77 N.J. 408, 420-21,

390 A.2d 1161, 1167-68 (1978) (applying this reasoning to New

Jersey law). I “recognize that several commentators have criticized the

distinction our law makes between physicians and attorneys in respect

of restrictive covenants.” Community Hospital Group, Inc. v. More,

183 N.J. 36, 55-56, 869 A.2d 884, 895-96 (2005) (collecting

commentary). Despite this criticism, I nevertheless rely on this court’s

power to govern the ethical standards of the legal profession as

justification for treating attorneys and physicians differently. See

Community Hospital Group, 183 N.J. at 56, 869 A.2d at 896

(applying New Jersey law); Intermountain Eye & Laser Centers,

P.L.L.C. v. Miller, 142 Idaho 218, ___, 127 P.3d 121, 132 (2005)

(applying Idaho law).

Second, the attorney-client relationship differs markedly from the

physician-patient relationship. Technology has enabled attorneys to

establish and maintain professional relationships with their clients

through, e.g., conference calls and faxes. In contrast, the physician-

patient relationship is highly personal, and necessarily requires face-to-

face contact between physicians and patients. The unique and highly

personal nature of the physician-patient relationship cautions this

court to defer consideration of a blanket prohibition of physician

restrictive covenants to the legislature.

The General Assembly possesses wide regulatory power with

respect to the health-care professions and, further, it is within the

broad discretion of the legislature to determine not only what the

public interest and welfare require, but also to determine the measures

needed to secure such interest. Burger v. Lutheran General Hospital,

198 Ill. 2d 21, 40-41 (2001), quoting Chicago National League Ball

Club, Inc. v. Thompson, 108 Ill. 2d 357, 364 (1985). Indeed:

“The primary expression of Illinois public and social policy

should emanate from the legislature. This is especially true

regarding issues like the present one, where there is

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disagreement on whether a new rule is warranted. The

members of our General Assembly, elected to their offices by

the citizenry of this State, are best able to determine whether

a change in the law is desirable and workable.

*** The General Assembly, by its very nature, has a

superior ability to gather and synthesize data pertinent to the

issue. It is free to solicit information and advice from the many

public and private organizations that may be impacted.

Moreover, it is the only entity with the power to weigh and

properly balance the many competing societal, economic, and

policy considerations involved.” Charles v. Seigfried, 165 Ill.

2d 482, 493 (1995).

I urge the General Assembly to consider the efficacy of physician

restrictive covenants, and I recommend that the legislature prohibit

such noncompetition agreements between physicians.

B. Reasonableness of These Physician Restrictive Covenants

This court properly holds that a blanket prohibition of all physician

restrictive covenants should emanate from the legislature. However,

my colleagues in the majority hold that the restrictive covenants

presented in this case are reasonable. I cannot agree. The court

improperly relies on a general analysis that ignores the unique nature

of the physician-patient relationship.

The general analysis is as follows. Courts usually hold that

contracts in total restraint of trade are illegal and void. Bauer v.

Sawyer, 8 Ill. 2d 351, 354-55 (1956); Hursen v. Gavin, 162 Ill. 377,

379-80 (1896). However, the validity of a partial restraint of trade,

e.g., a noncompetition agreement, is determined by its reasonableness

in terms of its effect on the parties and the public. Under the rule of

reason, a noncompetition agreement is reasonable and, therefore,

enforceable, if it: (1) is no broader than necessary to protect a

legitimate interest of the employer; (2) does not unduly burden the

employee; and (3) does not harm the public. House of Vision, Inc. v.

Hiyane, 37 Ill. 2d 32, 37 (1967); Bauer, 8 Ill. 2d at 355; Restatement

(Second) of Contracts §188 (1981). In relation to the employer’s

interest, the restraint must be reasonable as to activity, geographic

area, and time. Hursen, 162 Ill. at 380-82; Restatement (Second) of

Contracts §188, Comment d, at 43 (1981).

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However, in my view, when a restrictive covenant deals with

physicians, our traditional analysis should be applied in a manner

which explicitly and specifically references the injury to the public in

terms of patient care. Other states have so recognized. For example,

in Statesville Medical Group v. Dickey, 106 N.C. App. 669, 673, 418

S.E.2d 256, 259 (1992), the court referenced the injury to the public

as follows:

“To determine the risk of substantial harm to the public this

Court has considered the following factors: the shortage of

specialists in the field in the restricted area, the impact of

plaintiff establishing a monopoly *** in the area, including the

impact on fees in the future and the availability of a doctor at

all times for emergencies, and the public interest in having a

choice in the selection of a physician.”

Accord Valley Medical Specialists v. Farber, 194 Ariz. 363, 371, 982

P.2d 1277, 1285 (1999) (concluding that patients’ right to see the

physician of their choice is entitled to substantial protection);

Community Hospital Group, 183 N.J. at 60, 869 A.2d at 898, quoting

Karlin, 77 N.J. at 424, 390 A.2d at 1169-70 (holding that court must

evaluate several factors, including extent to which enforcing restrictive

covenant would foreclose patients from seeing the departing physician

if they desired to do so); Intermountain Eye, 142 Idaho at ___, 127

P.3d at 132 (“We adopt the view expressed by the supreme courts of

Arizona and New Jersey”). Such realistic consideration of patient care

recognizes human dignity and the importance of health care, rather

than viewing human beings as a commodity to be considered only in

the context of the employer and the employee.

I observe that I am not suggesting a departure from our traditional

common law analysis of restrictive covenants with its identified

elements. Rather, in agreement with the above-cited enlightened

courts, I consider patient care to be included in, or a subset of, the

element of public harm. York v. Rush-Presbyterian-St. Luke’s Medical

Center, 222 Ill. 2d 147 (2006), is a recent example of this court

recognizing the uniqueness of the physician-patient relationship in the

context of another general analysis. York involved a medical

malpractice action claiming that a hospital was vicariously liable for

the negligence of an independent-contractor physician under the

doctrine of apparent agency. This court unanimously held that, in the

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context of health care, it would treat the element of reliance in the

apparent agency analysis differently than in other contexts. The court

explained that the relationship between a patient and health-care

providers “presents a matrix of unique interactions that finds no ready

parallel to other relationships.” York, 222 Ill. 2d at 192. In the present

case, I am disappointed that my colleagues in the majority fail to

consider the uniqueness of physician restrictive covenants, as they

recently did in York, but rather, treat all restrictive covenants alike.

One might assume that this court would give particularized

treatment to physician restrictive covenants in light of the unique

considerations they present. Unfortunately, the majority of courts,

including this court, currently view the physician-patient relationship

as analogous to a simple merchant-customer relationship, thus

comparing a very complex relationship to a relationship that is more

routine. These courts do not analyze physician restrictive covenants

any differently than they analyze covenants-not-to-compete between

commercial parties. 41 Wake Forest L. Rev. at 192; accord 45

Rutgers L. Rev. at 4 (“Courts do not analyze noncompetition

agreements between physicians any differently than comparable

provisions between commercial parties”).

The court today concludes that the general analysis applicable to

all commercial restrictive covenants so completely takes into account

patient-care considerations and the ethical obligations of physicians to

patients that the court sees no difference in the two contexts. Slip op.

at 11. I respectfully disagree. A profound “disconnection” exists

between the prevailing physician restrictive covenant analysis and

patient care.

In applying the prevailing analysis to determine the reasonableness

of a physician restrictive covenant, this court has held that “the

interest of the public is in having adequate medical protection.” Bauer,

8 Ill. 2d at 355. In Bauer, for example, this court reasoned that the

reduction by one of 70 physicians serving a community would not

“cause such injury to the public” as to justify refusing to enforce the

restrictive covenant. Bauer, 8 Ill. 2d at 355. This dated view of the

public interest promotes the attitude that patients are

widgets–nondescript objects that anyone has the right to service.

Absent is any consideration of what effect enforcing the restrictive

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covenant would have on the interests of third parties, i.e., patient care

or the ethical obligations of physicians.

Further, this court has even misapplied this flawed numerical test.

In a case where the physician argued that a scarcity of physicians

would affect the public interest, this court reasoned:

“Nor is the contract injurious to any legitimate interest of

the public. Defendant can be as useful to the public at some

other place in the State as he can in Rockford, and the health

of persons elsewhere is just as important. It cannot be said that

the public interest is adversely affected if a physician decides

to move from one community to another, nor does it become

so if the move results from some agreement made in advance.

If a severe shortage exists in any particular place young

doctors will tend to move there, thus alleviating the shortage.”

Canfield v. Spear, 44 Ill. 2d 49, 52 (1969).

Accord Bauer, 8 Ill. 2d at 355 (“In any case, there is no reason why

Dr. Sawyer cannot serve the public interest equally well by practicing

in another community”); 358 Ill. App. 3d at 909 (applying this

reasoning in the present case).

Canfield, decided nearly 40 years ago, was the last time this court

was presented with determining the reasonableness of a physician

restrictive covenant (as opposed to a noncompetition agreement

between veterinarians, Cockerill v. Wilson, 51 Ill. 2d 179 (1972)).

Commentators have long condemned the above-quoted reasoning.

First, it completely ignores the interests of patients who lose their

physician due to enforcement of the restrictive covenant. Those

patients “will presumably find little comfort in knowing that patients

in some other area can now benefit from their doctor’s services.” 45

Rutgers L. Rev. at 30 n.136 (describing this analysis as “peculiar”).

Second, “the notion that the benefit of adding a new doctor to a to-be-

announced location equals the cost to incumbent patients caused by

losing their doctor is ridiculous. The incumbent patients suffer in the

short term a great deal more than the potential new patients gain.” 41

Wake Forest L. Rev. at 203-04; see Restatement (Second) of

Contracts §188, Illustration 14, at 48 (1981) (focusing analysis on

shortage of doctors in the affected area). Indeed, in examining the

temporal restrictions in these physician restrictive covenants, my

colleagues in the majority observe: “The measure of the potential

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harm to the public caused by the restriction is whether there exists a

sufficient number of cardiologists in the area to meet patient needs.”

(Emphasis in original.) Slip op. at 20. Based on the current

recognition of patient-care considerations and ethical obligations of

physicians, I am disappointed that this court does not take the

opportunity this case presents to expressly repudiate the flawed

reasoning expressed in Canfield.

Applying my proposed physician restrictive covenant analysis to

the present case, I conclude that the record contains insufficient

evidence to determine whether enforcement of these restrictive

covenants is injurious to the public. To be sure, the record does not

indicate a scarcity of physicians within the two-mile and five-mile

geographic areas affected by the covenants. Further, the restricted

hospitals in the geographic area are St. Mary of Nazareth Hospital,

Norwegian American Hospital, St. Elizabeth Hospital, and Sacred

Heart Hospital. The record contains evidence that there were more

than a sufficient number of qualified cardiologists ready and willing to

take care of plaintiffs’ patients. For example, Norwegian American

Hospital has five cardiologists serving a maximum of 100 patients,

when only two or three cardiologists are necessary for a hospital of

that size.

However, and more importantly, the record contains insufficient

evidence regarding the level of hardship that enforcement of these

physician restrictive covenants would impose on plaintiffs’ incumbent

patients, if they wished to maintain their relationships with plaintiffs.

For example, plaintiffs’ employer argued that there was “no basis in

the record for an assumption that restrictive covenants among

physicians will hinder patient care.” In support, the employer asserted

that plaintiffs “were quickly granted privileges at a number of hospitals

in the immediate area, including Weiss Memorial Hospital, Lincoln

Park Hospital, Gottlieb Hospital, Westlake Hospital, Lincoln Park

Hospital [sic] and Illinois Masonic Hospital.”

This argument misses the mark. The record does not disclose the

addresses of these hospitals, or any evidence of the relative distances

between these hospitals and those within the affected geographic

areas. While this court could properly take judicial notice of the

distances between locations (see, e.g., Dawdy v. Union Pacific R.R.

Co., 207 Ill. 2d 167, 177-78 (2003)), still absent would be evidence

-39-

of the hardship, if any, this data would impose on plaintiffs’ incumbent

patients.7 Based on this lack of essential evidence of record, I would

reverse the judgments below and remand the cause to the circuit court

for additional fact finding.

IV. CONCLUSION

For the foregoing reasons, I concur in part and dissent in part.

7

If I were to take judicial notice of these relative distances, some would

appear to demonstrate hardship to those of plaintiffs’ incumbent patients who

wish to maintain their relationship with plaintiffs. For example, if one of

plaintiffs’ patients received hospital services at Sacred Heart Hospital,

located at 3240 W. Franklin Boulevard in Chicago, through a Health

Maintenance Organization (HMO) or a Paid Provider Organization (PPO),

that patient would have to travel approximately eight miles to see either

plaintiff at Louis A. Weiss Memorial Hospital, located at 4646 N. Marine

Drive. That same patient would have to travel approximately 11 miles to see

either plaintiff at Gottlieb Memorial Hospital, located at 701 W. North

Avenue, in Melrose Park, a suburb of Chicago. Of course, this assumes that

either Weiss or Gottlieb were a recognized provider under the patient’s health

insurer or HMO.

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