In a recent ruling that one attorney called "a sigh of relief" for hospitals nationwide, the Illinois Supreme Court determined hospitals can have physicians on the payroll without violating corporate practice-of-medicine law.
The court, in a 5 to 2 decision on Oct. 23, said hospitals are exempt from such law because physicians are necessary to the services a hospital provides.
"To conclude that a hospital must (provide services) without employing physicians is not only illogical but (also) ignores reality," the Illinois court said, quoting the Kansas Supreme Court, in its majority opinion.
The decision is a "cause for celebration" and a "sigh of relief" for hospitals, says Patricia Jacobsen, a Lorain, Ohio-based healthcare attorney.
Jacobsen has written journal articles about various fights over corporate practice-of-medicine law.
Had the court ruled that the law invalidated Richard Berlin's, contract with Sarah Bush Lincoln Health System of Mattoon, Ill., it would have had a chilling effect on any attempt to employ doctors in an integrated system, Jacobsen says.
Sarah Bush Lincoln sued Berlin in 1994 after the general surgeon left the system to work for the Carle Clinic, a multispecialty group practice in Urbana, Ill.
The hospital said Berlin's action violated a noncompete clause in his contract that included a clause forbidding his working within 50 miles of Sarah Bush Lincoln for two years after his departure. Urbana is 48 miles north of Mattoon.
Two lower courts agreed with Berlin's contention that past Illinois Supreme Court rulings prevented anyone, including hospitals, from employing physicians, thereby making his contract unenforceable.
But the Illinois Supreme Court disagreed, and it sent the case back to the Coles County, Ill., court in which it originated. Berlin's attorney, Cameron Dobbins of Champaign, Ill., and Sarah Bush Lincoln spokeswoman Kathy Roland say discussions are underway to determine whether their fight will continue.
Attorney Richard Haldeman of Rockford, Ill., who has a separate case that concerns a physician fighting a noncompete clause pending before the Illinois Supreme Court, says the court's decision eliminates only one criterion for breaking a deal. Haldeman and Dobbins have taken numerous calls from physicians wanting to have their contracts with hospitals declared invalid.