Ruskin Moscou Faltischek Obtains Victory in Court Setting Precedent for Restrictive Covenants in Healthcare

SUFFOLK COUNTY SUPREME COURT RULES IN FAVOR OF THE PLAINTIFF SEEKING TO LIMIT SCOPE OF RESTRICTIVE COVENANT IN EMPLOYMENT AGREEMENT

Uniondale, New York – June 7, 2016 – The litigation team at Ruskin Moscou Faltischek, led by Mr. Thomas A. Telesca, Partner and Litigator, has won a decisive victory in Suffolk County Supreme Court on behalf of its client, Smithtown-based healthcare provider, Dr. Rajmani Krishnan, who filed a lawsuit against Suffolk Anesthesiology Associates, P.C., also based in Smithtown, NY.

In the lawsuit, filed in October, 2015, Dr. Krishnan, a practicing pain management physician in Smithtown, New York, sought to limit the scope of the restrictive covenant in his employment agreement with his former employer Suffolk Anesthesiology Associates (SAA), the exclusive anesthesia provider at St. Catherine’s of Siena Medical Center in Smithtown.  As written, the restrictive covenant covered all physician services within a twenty mile radius of St. Catherine’s.  Dr. Krishnan sought to limit the restrictive covenant to anesthesia services only, as that is the sole practice of SAA. In response to Dr. Krishnan’s lawsuit, SAA sought a permanent injunction to enforce the restrictive covenant as written or, alternatively, a preliminary injunction during the pendency of the litigation, which would have prevented Dr. Krishnan from providing all physician services in the restricted area.

In a decision made on June 6, 2016, that sets precedent in the healthcare arena, the Commercial Division of the Suffolk County Supreme Court has denied SAA’s motion for a permanent injunction and has denied in part, and granted in part, SAA’s alternative motion for a preliminary injunction.  The Court has only preliminary enjoined Dr. Krishnan from practicing anesthesiology within the restricted area.  Dr. Kirshnan is free to continue his distinct pain management practice while the case proceeds to trial on the issue of the enforceability of the restrictive covenant.

The presiding Commercial Division Justice, Hon. Jerry Garguilo’s decision reflects the continued changes taking place in the healthcare field.  As more and more physicians specialize or even sub-specialize, courts must be sensitive to these changes and not enforce overly broad restrictive covenants.  In the past, courts were protective of former employers who could be harmed by former employees competing against them in the same field of medicine.  In today’s new healthcare environment, a group of physicians practicing in one specialty, such as anesthesiology, cannot be harmed by a former employee who practices in a different specialty, such as pain management.

Mr. Thomas A. Telesca, Partner and Litigator for Ruskin Moscou Faltischek, P.C., who spearheaded the defense against SAA’s motion stated, “The Suffolk County Supreme Court made the right decision, seeing that as medicine becomes more specialized, the law needs to follow.  We believe that this decision will have a far reaching impact in the arena of restrictive covenants for physicians in New York.  Attorneys representing individual physicians and medical practices will have to take more care in drafting restrictive covenants and make sure that they take into account the many specialties that exist in the medical field.  Although this is not a final decision, SAA has failed to show ‘a likelihood of success on the merits,’ and its request for a preliminary injunction in connection with Dr. Krishnan’s practice of pain management was denied.”

For more than 48 years, Ruskin Moscou Faltischek P.C., headquartered in Uniondale, New York, has built a reputation as one of the region’s leading providers of innovative legal services. Its attorneys are practical, experienced advocates who measure their success by their clients’ success. Cornerstone groups in all major practice areas of the law are represented at the firm, including corporate & securities, financial services, commercial litigation, intellectual property, health care, real estate, employment, cybersecurity and data privacy, energy, and trusts & estates. Clients include large and mid-sized corporations, privately held businesses, institutions and individuals.

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