FL court upholds non-compete clause in ASC case

The Florida Second District Court of Appeal has reversed a lower court finding in the case of AmSurg New Port Richey FL, Inc. v. Sreenivasa Prasad Vangara, involving a physician covenant not to compete. Sreenivasa Prasad Vangara, MD, was an investor in an ambulatory surgery center (ASC) that was also owned by AmSurg, a national owner and operator of ASCs based in Tennessee. The agreement governing ownership and management of the ASC contained a provision prohibiting its owners from having a financial interest in or developing a business competitive with the ASC. The ASC’s physician-owners were not prohibited from practicing medicine nor were they required to refer patients to or perform procedures at the AmSurg center.

Vangara operated a competing ASC while he was an owner of the AmSurg facility; AmSurg sued him for breach of contract, but the trial court ruled in favor of Dr. Vangara. Applying Tennessee law (which the parties had agreed in the contract would govern the contract), the trial court held that Tennessee’s non-compete case law prohibited non-competes against physicians, except in extremely limited circumstances, which did not apply to this case.

However, the Florida Second District Court of Appeal reversed this ruling, noting that Vangara’s non-compete did not prohibit him from practicing medicine, but only from being involved in a competing business. The court reasoned that, because Dr. Vangara’s non-compete did not interfere with the physician-patient relationship, the broad prohibition on physician non-competes under Tennessee law was inapplicable.

Source: Blalock Walters P.A.