Nurse Practitioner Non-Compete Deemed Invalid and Unenforceable
In 2006, Ameanthea Blanco joined Patient First Richmond Medical Group (“Patient First”) as a Family Nurse Pracitioner. She was responsible for screening patients in an primary and urgent care setting. As a condition of employment, she signed a non-compete contract.
In 2010, while working for Patient First, Ms. Blanco formed The Practice, Set Fee Clinic (“The Practice”) and solicited two physician co-workers at Patient First to join her at the new venture as employees.
She resigned her employment and began operating The Practice within a seven-mile radius of Patient First, which sued her for violating the non-compete.
After the lawsuit was served, Ms. Blanco moved to dismissed the claims. She alleged that the non-compete and non-solicitation provisions in her employment contract were invalid and unenforceable as a matter of Virginia law.
The non-compete stated:
…for a period of two (2) years following the termination of … employment for any reason … [defendant] will not, directly or indirectly, for himself or as an agent, officer, director, member, partner, shareholder, independent contractor, owner or employee, either:
(i) perform medical services of the type he performed for Patient First during the twelve (12) months immediately preceding termination of employment within a seven (7) mile radius of any Patient First Center at which [defendant] regularly provided medical services on behalf of Patient First during the twelve (12) months immediately preceding the date of termination of his employment … or
(ii) perform urgent care medical services, as hereinafter defined … within a fifteen (15) mile radius of any Primary Center.
The contract also included a prohibition against solicitation of staff. During employment and for a period of two years thereafter, the employee:
…shall not, directly or indirectly, whether for himself or for another person or entity, solicit or induce, or attempt to solicit or induce, any person who was employed by Patient First at any time during the twelve (12) month period immediately preceding the termination of [employee’s] employment to leave the employment of Patient First for any reason whatsoever, or to hire any such individual so employed by Patient First.
Under Virginia law, a non-compete must be reasonably limited in geographic scope, duration, and functional limitation. Omniplex World Services Corp. v. U.S. Invest. Services, Inc., 270 Va. 246, 249 (2005). Here, the geographic scope of seven miles and the duration of two years is likely reasonable.
However, Patient First’s prohibition against “performing medical services” is likely overbroad from a functional perspective. In order to be enforceable, a non-compete must be limited “to employment that would be in competition with [the employer.” Id. at 250. In other words, the non-compete be so expansive as to include “‘a wide range of enterprises unrelated to’ the business of [the employer.” Motion Control Systems, Inc. v. East, 263 Va. 33, 38 (2001). The Virginia Supreme Court will not uphold a non-compete unless it is restricted to positions that are or could be directly competitive with the employer. Id.
Here, Patient First’s non-compete is too broad because its reach is not limited to occupations and businesses that are in competition with Patient First. It bars indirect involvement by the nurse practitioner in performing medical services, even as a shareholder. Barring one from being a stockholder in publicly traded company is virtually inherently overbroad. Moreover, the term “medical services” could encompass a range of unrelated businesses that do not compete with Patient First; thus, the non-compete is overbroad and unenforceable.
Additionally, the term “medical services” is ambiguous, and “subjecting an employee to such uncertainty offends sound public policy,” and could render the non-compete unenforceable. See Lanmark Tech, Inc. v. Canales, 454 F. Supp. 2d 524 (E.D. Va. 2006) (invaliding a non-compete that failed to defined ambiguous critical terms such as “services”); Power Distribution, Inc. v. Emergency Power Engineering, Inc., 569 F. Supp. 54, 58 (E.D. Va. 1983) (provision invalid when employee “must try to interpret the ambiguous provision to decide whether it is prudent from a standpoint of possible legal liability to accept a particular job or whether it might be necessary to resist plaintiff’s efforts to assert that the provision covers a particular job”).
Similarly, the prohibition against hiring the employees of Patient First “for any purpose” was unreasonably overbroad and unenforceable. Applied literally, the nurse practitioner was restricted from hiring her colleagues to work as babysitters, dog catchers, or other unrelated activities, at any location around the world. Patient First lacked a legitimate business interest for such a sweeping prohibition, and it is overbroad and unenforceable.
Accordingly, the court granted the nurse practitioner’s motion to dismiss. She was released from complying with the non-compete.
Download: Patient First Richmond Medical Group, LLC v. Blanco, Case No. CL10-6211 (Virginia Beach 2011)