April 24, 2015
GEISINGER CLINIC, Appellant
MARK M. RADZIEWICZ, D.O., Appellee
Appeal from the Order Entered February 24, 2014 In the Court of Common Pleas of Montour County Civil Division at No(s): 449-2013
BEFORE: BOWES, OTT, and STABILE, JJ.
Geisinger Clinic ("Geisinger") appeals from the February 24, 2014 order denying its request for a preliminary and permanent injunction. We reverse and remand for entry of an order consistent with this adjudication.
On December 3, 2013, Geisinger instituted this action seeking an injunction against its former employee, Dr. Mark M. Radziewicz, D.O. ("Dr. Radziewicz"). It averred the following in its complaint. On January 8, 1998, upon accepting employment at Geisinger, Dr. Radziewicz executed a practice agreement. The January 8, 1998 accord stated that Dr. Radziewicz accepted a position as an associate physician practicing family medicine for Penn State Geisinger Medical Group-Dallas of Penn State Geisinger Clinic commencing on July 1, 1998. Dr. Radziewicz agreed that "[a]cceptance of this position" constituted his understanding that, in the event that his employment was terminated, it was his "agreement to restrict my practice of medicine" and that he could practice in "an area outside of a 15 mile radius" from his principal site of practice. Complaint, 12/3/13, at Exhibit A p.1. The restriction lasted for two years following the end of the parties' employment relationship.
Dr. Radziewicz acknowledged that the restrictive covenant was necessitated by the fact that "considerable effort will be devoted [by] other Penn State Geisinger Clinic physicians and personnel in assisting me in the development and maintenance of my practice[.]" Id. Geisinger agreed to waive the covenant if Dr. Radziewicz paid either the greater of Dr. Radziewicz's annualized base salary or his total compensation during the year prior to his termination.
When the January 8, 1998 restrictive covenant was executed, Dr. Radziewicz planned to practice at the noted Dallas location. However, before commencing employment, his practice location was changed to Mountain Top, Luzerne County. Accordingly, on April 19, 1998, before he began to work for Geisinger, Dr. Radziewicz signed an addendum to the January 8, 1998 agreement. In the April 19, 1998 addendum, the restrictive covenant was altered to encompass an area that was within fifteen miles from Penn State Geisinger Health System's Mountain Top office. Dr. Radziewicz again stated that, by accepting his new position, he agreed to "restrict my practice of medicine" to outside the noted fifteen-mile radius and that the restriction applied for two years. Id. at Exhibit B. The addendum confirms that, "This restriction applies not only to an office I may seek to establish within the restricted area for my practice but to staff memberships and the exercise of clinical privileges at any health care facility" within the denoted area. Id.
Dr. Radziewicz practiced as a full-time physician from July 1, 1998 through June 22, 2012 at the Mountain Top practice site. Geisinger spent in excess of $67, 000 to promote and build Dr. Radziewicz's family practice at that location, and Dr. Radziewicz had access to Geisinger's marketing and strategic plan techniques. Geisinger trained Dr. Radziewicz in various areas. On June 22, 2012, Dr. Radziewicz separated from employment with Geisinger, and on June 26, 2012, Dr. Radziewicz became an employee of Advanced Inpatient Medicine, Inc. ("AIM"). On October 7, 2013, Dr. Radziewicz began to violate his restrictive covenant by starting to practice medicine with the fifteen-mile radius prohibited by the accord.
Hearings were held on the matter. Dr. Radziewicz reported that he worked for Geisinger as a primary care physician from 1998 until his termination on June 22, 2012. Dr. Radziewicz acknowledged executing the January 8, 1998 and April 19, 1998 documents as a condition for his initial hiring by Geisinger. Dr. Radziewicz also admitted that he was working for an AIM hospital approximately eight miles from where he formerly practiced for Geisinger in Mountain Top.
Dr. Radziewicz was asked whether, during his tenure at Geisinger, Geisinger "spent its resources promoting that clinic site and promoting and developing at that site, " and Dr. Radziewicz responded, "Correct." N.T. Hearing, 12/17/12, at 21-22. Dr. Radziewicz also did not dispute that Geisinger promoted him personally "in newspapers and advertisements, mailers to [its] patients" and that the advertising payments "came out of Geisinger's costs[.]" Id. at 22. The witness was asked if he was "the beneficiary of Geisinger's practices with respect to developing [his] clinical skill, chronic disease management, things like that, " and he again responded, "Correct." Id. at 23. He also was "privy to" and participated in "discussions regarding Geisinger's strategic development and strategic business plan[.]" Id.
When he separated from employment with Geisinger on June 22, 2012, Dr. Radziewicz began to work for AIM on June 26, 2012, at Wayne Memorial Hospital, Honesdale, Wayne County, which was not within the area covered by the April 19, 1998 restrictive covenant. Dr. Radziewicz worked there as a hospitalist, a doctor who cares for inpatients admitted to the hospital. A hospitalist operates as a primary care physician ("PCP") for inpatients in a hospital and treats patients who either do not have a PCP or whose PCP does not have privileges at the hospital in question. Id. at 52-53. Upon discharge, if the patient has a PCP, he is referred to that doctor, but a patient who has no PCP can be referred to a PCP suggested by the hospitalist.
On October 7, 2013, AIM transferred Dr. Radziewicz to Wilkes-Barre General Hospital in Wilkes-Barre, which, as Dr. Radziewicz admitted, was approximately eight miles away from Mountain Top. At that location, Dr. Radziewicz continued to work as a hospitalist. Dr. Radziewicz specifically agreed that he was not disputing that he may have seen Geisinger patients at Wilkes-Barre General Hospital, but he had no specific knowledge of having done so. Id. at 30, 56.
Geisinger also adduced the following unrebutted proof. None of Geisinger's PCPs has staff privileges at Wilkes-Barre General Hospital. Concomitantly, any Geisinger patient admitted to that hospital would have to use a hospitalist. A patient can be admitted through the emergency room, by a surgeon, or through referral by his or her PCP. While Dr. Radziewicz had no control over who is admitted to the hospital, another PCP in the area could be inclined to admit a patient based upon Dr. Radziewicz's general reputation in the community for being a good physician. Thus, if Dr. Radziewicz had a positive reputation, other PCPs would be more likely to refer their patients to Wilkes-Barre General Hospital rather than the nearby Geisinger hospital due to that status. Id. at 76. Geisinger submitted documentary proof that Dr. Radziewicz had treated a Geisinger patient at Wilkes-Barre General Hospital.
Additionally, the following was uncontested. Since 2000, Geisinger expended about $65, 000 promoting and marketing Dr. Radziewicz's practice. In addition, during his fourteen-year tenure at Geisinger, Geisinger developed Dr. Radziewicz's family practice skills. "The skills of systems of care that Geisinger" developed related to "transitions from inpatient to outpatient" and "organized delivery using the electronic health record for chronic disease and preventative care." Id. at 86. Geisinger is nationally known and recognized for methods that it has developed and which Dr. Radziewicz utilized at that institution. He gained knowledge of Geisinger's "delivery processes, the systems, the organization, the methods by which you deliver" the clinical skills learned in medical school and residency programs "in an organized setting taking advantage of the electronic health record and the group practice." Id. at 87.
Based on this evidence, on February 24, 2014, the trial court denied Geisinger's petition for a preliminary/permanent injunction. It concluded that Geisinger was not likely to prevail on the merits of its position that Dr. Radziewicz breached the restrictive covenant. It also found that there may be an adequate remedy at law in that Geisinger represented that it was pursuing an action at law for damages in Luzerne County. It also found that Dr. Radziewicz would suffer more harm than Geisinger since issuance of an injunction would result in a loss of his livelihood. This appeal followed denial of relief. Geisinger raises the following contention on appeal:
Whether the trial court abused its discretion in denying Geisinger Clinic's request for preliminary injunction where no reasonable grounds exist in the record to support the trial court's Order and the rule of law relied upon by the trial court was erroneous and misapplied?
Appellant's brief at 2.
A trial court's decision to grant or deny a preliminary injunction is reviewed under an abuse of discretion standard. Brayman Const. Corp. v. Com., Dept. of Transp., 13 A.3d 925 (Pa 2011). Specifically:
On an appeal from the grant or denial of a preliminary injunction, we do not inquire into the merits of the controversy, but only examine the record to determine if there were any apparently reasonable grounds for the action of the court below. Only if it is plain that no grounds exist to support the decree or that the rule of law relied upon was palpably erroneous or misapplied will we interfere with the decision of the Chancellor.
Id. at 935-36 (citations omitted). A petition must establish the following six elements in order to obtain a preliminary injunction:
(1) relief is necessary to prevent immediate and irreparable harm that cannot be adequately compensated by money damages; (2) greater injury will occur from refusing to grant the injunction than from granting it; (3) the injunction will restore the parties to their status quo as it existed before the alleged wrongful conduct; (4) the petitioner is likely to prevail on the merits; (5) the injunction is reasonably suited to abate the offending activity; and (6) the public interest will not be harmed if the injunction is granted. See Summit Towne Ctr., Inc. v. Shoe Show of Rocky Mount, Inc., 573 Pa. 637, 646–47, 828 A.2d 995, 1001 (2003).
Id. at 935.
The trial court concluded that one, two, and four were not satisfied herein. We first address the trial court's finding that Geisinger would not suffer irreparable harm that could not be compensated through monetary damages absent issuance of the injunction. As we noted in Quaker City Engine Rebuilders, Inc. v. Toscano, 535 A.2d 1083, 1085 (Pa.Super. 1987) (quoting Bryant Co. v. Sling Testing and Repair, Inc., 369 A.2d 1164, 1167 (Pa. 1977):
It is not the initial breach of a covenant which necessarily establishes the existence of irreparable harm but rather the threat of the unbridled continuation of the violation and the resultant incalculable damage to the former employer's business that constitutes the justification for equitable intervention.
We observed in that case that a restrictive covenant is designed to prevent more than just a loss of business, which can be assessed by calculable damages. It is also tailored to prevent the potential for a disturbance in the relationship between the former employer and its clients and to protect the employer's client base that has been established through prior dealings. "It is the possible consequences of this unwarranted interference with customer relationships that is unascertainable and not capable of being fully compensated by money damages." Quaker City, supra at 1086 (quoting Bryant, supra at 1167) (emphasis added). Thus, if a covenant is reasonable, then it becomes enforceable in equity.
The fact that Geisinger potentially will be able to comb its patient base and determine lost revenues does not mean the injunction is not necessary to prevent immediate and irreparable harm. Since a restrictive covenant is entered in order to prevent a potential rather than actual loss of clients, it will be given effect even if the former employer could possibly ascertain its loss of income from the breach. If a party to such an agreement violates its tenets, then compliance with the accord must be compelled through injunctive relief. Otherwise, the agreement is not worth the paper upon which it is written. Thus, there were no reasonable grounds for the trial court's determination that the first aspect of the test for obtaining an injunction was not satisfied herein.
Although not used by either Dr. Radziewicz or the trial court as grounds for denying Geisinger injunctive relief, the dissent contends that the inclusion of a purported liquidated damages clause in the contract establishes that Geisinger's harm can be adequately compensated with monetary damages. The clause in question reads:
I further understand that Penn State Geisinger Clinic will waive this restriction upon receipt of payment, in advance, of a sum equal to the greater of (a) my annualized base salary as of the date of this Agreement; or(b) my total compensation paid by Penn State Geisinger Clinic during the twelve calendar months immediately preceding the month in which my termination occurs, if I wish to continue my practice within the restricted area during the two years following my termination. Because the financial burdens Penn State Geisinger Clinic would endure are very difficult to ascertain and quantify, I agree that this is a fair amount of compensation to pay, as liquidated damages, and not as a penalty, in the event that I wish to continue my practice within the restricted area within the specified two year period.
First, the characterization of this clause as a liquidated damages clause is tenuous. In a liquidated damages clause, the parties agree, in advance of any breach, that a set amount of damages will be awarded if a breach occurs. Thus, a liquidated damages clause would provide that, if Dr. Radziewicz breached the contract, then Geisinger could sue and obtain the damages outlined in the covenant. This clause is the reverse scenario in that it permits Dr. Radziewicz to avoid the restrictive covenant if he tenders an amount to Geisinger characterized as liquidated damages.
More importantly, the Restatement of Contracts explicitly outlines that a party can obtain injunctive relief despite the existence of a liquidated damages clause in the contract. It states, "Specific performance or an injunction may be granted to enforce a duty even though there is a provision for liquidated damages for breach of that duty." Restatement (Second) of Contracts § 361 Comment a provides a rationale for the precept:
A contract provision for payment of a sum of money as damages may not afford an adequate remedy even though it is valid as one for liquidated damages and not a penalty (§ 356). Merely by providing for liquidated damages, the parties are not taken to have fixed a price to be paid for the privilege not to perform. The same uncertainty as to the loss caused that argues for the enforceability of the provision may also argue for the inadequacy of the remedy that it provides. Such a provision does not, therefore, preclude the granting of specific performance or an injunction if that relief would otherwise be granted.
Accord Roth v. Hartl, 75 A.2d 583, 586 (Pa. 1950) (Presence of a liquidated damages clause in an agreement for the sale of real estate "will not restrict the remedy thereto or bar specific performance unless the language of the part of the agreement in question, or of the entire agreement, together with other relevant evidence, if any, shows a contrary intent."); Boulder Medical Center v. Moore, 651 P.2d 464 (Colo.App. 1982) (medical partnership awarded both liquidated damages and injunctive relief where physician breached covenant not to compete). Bradley v. Health Coalition, Inc., 687 So.2d 329 (Fla.App. 3 Dist. 1997) (rejecting former employee's position that a noncompetition agreement could not be enforced through injunctive relief since the accord contained a liquidated damages clause thereby providing adequate legal remedy for breach of covenant).
Herein, the liquidated damages clause in question supports the conclusion that injunctive relief should issue. The clause permitted Dr. Radziewicz to avoid the effect of the restrictive covenant if he tendered the stated amount, which Dr. Radziewicz failed to do. Since Dr. Radziewicz did not proffer the amount outlined in the clause, Geisinger's ability to enforce the restrictive covenant is reinforced rather than eroded by the clause in question.
We also concur with Geisinger that there are no reasonable grounds for the trial court's declaration that greater injury would result to Dr. Radziewicz by grant of the injunction. In this respect, the trial court decided that Dr. Radziewicz would lose his ability to earn a living if the injunction were granted. The evidence presented by Dr. Radziewicz himself precludes such a finding. Dr. Radziewicz reported that he was gainfully employed at another AIM facility, Wayne County Hospital, after his employment was terminated, and he then transferred to the hospital within the zone prohibited by the restrictive covenant. Dr. Louis O'Boyle, who was called as a witness by Dr. Radziewicz, owns AIM, which employs Dr. Radziewicz and provides the hospitalists for Wilkes-Barre General Hospital and Wayne Memorial Hospital. N.T. Hearing, 2/12/14, at 4. Dr. O'Boyle agreed that there was "nothing to prevent Dr. Radziewicz from going back to Wayne Memorial Hospital, " and that his compensation would remain the same. Id. at 253. Thus, the proof presented by Dr. Radziewicz established that he would not lose his ability to make a living if the restrictive covenant was enforced and there are no apparently reasonable grounds for the trial court's contrary finding.
Finally, we analyze whether the trial court correctly decided that it is unlikely that Geisinger will prevail on the merits. We conclude that the restrictive covenant is enforceable and was breached and that, concomitantly, there are no apparently reasonable grounds for the trial court's conclusion that Geisinger is unlikely to prevail on the merits. "In order for a 'non-competition' covenant to be enforceable, it must relate to a contract for employment, be supported by adequate consideration and be reasonably limited in both time and territory." Insulation Corp. of America v. Brobston, 667 A.2d 729, 733 (Pa.Super. 1995). Although "Pennsylvania courts have historically been reluctant to enforce contracts that place restraints on trade or on the ability of an individual to earn a living, " it is settled that "non-competition covenants are not per se unreasonable or unenforceable." WellSpan Health v. Bayliss, 869 A.2d 990, 996 (Pa.Super. 2005). A restrictive covenant must be reasonably related to a legitimate business interest of the employer. Id. "In addition, the temporal and geographical restrictions imposed on the ex-employee must be reasonably limited." Id. at 999.
The contract in question was related to a contract for employment, as Dr. Radziewicz admitted that he signed it in order to accept employment with Geisinger. Additionally, it is supported by adequate consideration. As our Supreme Court noted in Pulse Technologies, Inc. v. Notarom, 67 A.3d 778, 781 (Pa. 2013) (citation omitted), "In Pennsylvania where a contract of employment, which is ancillary to the taking of employment, contains reasonable restrictive covenants that do not constitute illegal restraints of trade, the restrictive covenants are valid and enforceable." Thus, where the covenant was entered as part of the contract establishing a new employment relationship, the employment itself "constitutes consideration supporting that covenant, as well as all other terms of the employment contract." Socko v. Mid-Atlantic Systems of CPA, Inc., 99 A.3d 928, 931-32 (Pa.Super. 2014), appeal granted, 2014 WL 6991669 (Pa. Dec. 11, 2014).
In the present case, the restrictive covenant was ancillary to Dr. Radziewicz's acceptance of employment at Geisinger and, based upon that fact alone, supported by consideration. The agreement additionally protected a reasonable interest of Geisinger, in that, according to its unrefuted proof, it promoted Dr. Radziewicz's nascent practice of medicine and facilitated his ability to earn a living in the area by advertising and building a patient base. No one contested that the agreement in question was geographically and temporally reasonable. Hence, it was enforceable.
We note that the trial court implicitly concluded that there was no consideration for the accord. It found that Geisinger exaggerated its expenditures to nurture Dr. Radziewicz's practice. However, given that the covenant's consideration was provided by the fact that Dr. Radziewicz entered it ancillary to his employment, whether Geisinger expended significant monetary resources to promote the practice does not affect the enforceability of the covenant. Moreover, Dr. Radziewicz admitted that sums were expended to promote his practice and that he learned practices and policies from Geisinger that enhanced his ability to engage in the practice of medicine, which he began with that entity.
The trial court also found that the restrictive covenant was not violated since Dr. Radziewicz was not competing with his former practice. This finding was premised upon the fact that Dr. Radziewicz was a hospitalist rather than a practicing PCP in an outpatient setting. However, the fact that Dr. Radziewicz was an inpatient PCP rather than clinical PCP is not pertinent to whether the agreement was violated. Dr. Radziewicz agreed "to restrict my practice of medicine." Complaint, 12/3/13, at Exhibit B. The April 19, 1998 addendum confirms that, "This restriction applies not only to an office I may seek to establish within the restricted area for my practice but to staff memberships and the exercise of clinical privileges at any health care facility" within the denoted area. Id. As of October 7, 2013, Dr. Radziewicz was practicing medicine at Wilkes-Barre General Hospital, N.T. Hearing, 2/12/14, at 17, regardless of whether he competed with his former PCP practice with Geisinger. He was exercising clinical privileges at a health care facility while still subject to the restrictive covenant. Hence, Dr. Radziewicz violated the covenant, and there were no apparent reasonable grounds for the trial court's conclusion to the contrary. The restrictive covenant was valid, and Dr. Radziewicz violated its clear and express terms when he started to work at Wilkes-Barre General Hospital in October 2013.
We now consider what relief to grant Geisinger since the restrictive covenant expired on June 22, 2014, while this appeal was pending. Geisinger asks that an injunction be issued preventing Dr. Radziewicz from practicing at Wilkes-Barre General Hospital for "a period of six (6) months and three (3) weeks, which is the equivalent of the period of time left in the restrictive covenant when Geisinger filed its Complaint." Appellant's reply brief at 5. Dr. Radziewicz's position is that the agreement expired on June 22, 2014, and contains no language permitting the time to be amended.
Initially, we observe that we have revised restrictive covenants by judicial pronouncement. Specifically, when a restrictive covenant is not reasonably limited in geographic location, the trial court is permitted to determine the parameters of the covenant in question. In Davis & Warde, Inc. v. Tripodi, 616 A.2d 1384, 1388 (Pa.Super. 1992), we outlined:
The covenant not to compete in the instant case, although limited in time, was not limited geographically. This does not necessarily impair the validity of the covenant, but any relief granted by the trial court must be geographically limited so as not to exceed that which is reasonably necessary to provide the protection for which appellant contracted. See: Sidco Paper Co. v. Aaron, 465 Pa. 586, 594-595, 351 A.2d 250, 254-255 (1976) ("where the covenant imposes restrictions broader than necessary to protect the employer, we have repeatedly held that a court of equity may grant enforcement limited to those portions of the restrictions which are reasonably necessary for the protection of the employer."); Bell Fuel Corp. v. Cattolico, supra (trial court may define geographic scope of covenant after receiving proper evidence upon remand); Quaker City Engine Rebuilders, Inc. v. Toscano, 369 Pa.Super. 573, 584-585, 535 A.2d 1083, 1089 (1987) ("In Pennsylvania, an otherwise valid restrictive covenant which is geographically overbroad is 'divisible and enforceable once it has been limited by the court to reasonable geographical limits'"; therefore case remanded to trial court to determine reasonable geographic scope of covenant). . . . On remand, this determination should be made by the trial court.
Herein, the covenant not to compete was breached by Dr. Radziewicz. We will not hesitate to fashion an appropriate remedy for that breach. He cannot be allowed to practice in violation of the terms of the restrictive covenant for the period during which he violated its terms. To do so would encourage others to prematurely breach valid restrictive covenants in the hopes of running out the term during the pendency of legal proceedings. Hence, this case is remanded for entry of an injunction prohibiting Dr. Radziewicz from practicing medicine in violation of the restrictive covenant for the six months and three weeks that he breached its terms.
The order is reversed. The case is remanded for entry of an order consistent with this adjudication. Jurisdiction is relinquished.
Judge Stabile joins the opinion.
Judge Ott files a dissenting opinion.
Because I believe that the certified record demonstrates the trial court based its decision on actual, not merely apparently, reasonable grounds, I would affirm the denial of the preliminary and permanent injunction that Geisinger Clinic sought against Mark M. Radziewicz, D.O. Accordingly, I respectfully dissent.
Our scope of review "on an appeal from a decree either granting or denying a preliminary injunction is to examine the record only to determine if there were any apparently reasonable grounds for the action of the court below." Bryant v. Sling Testing, 369 A.2d 1164, 1167 (Pa. 1977) quoting Lindenfelser v. Lindenfelser, 123 A.2d 626 (Pa. 1956) (emphasis added).
Our law permits equitable enforcement of employee covenants not to compete only so far as reasonably necessary for the protection of the employer. Bettinger v. Carl Berke Associates, Inc., 455 Pa. 100, 314 A.2d 296 (1974); Reading Aviation Service Co. v. Berolet, 454 Pa. 488, 311 A.2d 628 (1973). However, where the covenant imposes restrictions broader than necessary to protect the employer, we have repeatedly held that a court of equity may grant enforcement limited to those portions of the restrictions which are reasonably necessary for the protection of the employer, Jacobson & Co. v. International Environment Corp., 427 Pa. 439, 235 A.2d 612 (1967) (unanimous).
Sidco Paper Company v. Aaron, 351 A.2d 250 (Pa. 1976) (further citation omitted) .
There are six elements that must be established in order to obtain a preliminary injunction. Accordingly, the failure to establish any of the six elements requires the trial court to deny the injunction. Gati v. University of Pittsburgh, 91 A.3d 723, 729 (Pa. 2014). The six elements are:
First, a party seeking a preliminary injunction must show that an injunction is necessary to prevent immediate and irreparable harm that cannot be adequately compensated by damages. Second, the party must show that greater injury would result from refusing an injunction than from granting it, and, concomitantly, that issuance of an injunction will not substantially harm other interested parties in the proceedings. Third, the party must show that a preliminary injunction will properly restore the parties to their status as it existed immediately prior to the alleged wrongful conduct. Fourth, the party seeking an injunction must show that the activity it seeks to restrain is actionable, that its right to relief is clear, and that the wrong is manifest, or, in other words, must show that it is likely to prevail on the merits. Fifth, the party must show that the injunction it seeks is reasonably suited to abate the offending activity. Sixth, and finally, the party seeking an injunction must show that a preliminary injunction will not adversely affect the public interest.
Id. at 728.
Instantly, the trial court determined Geisinger had failed to meet elements one, two and four. The trial court came to this conclusion because,
all of [Geisinger's] arguments require an acceptance of the credibility of the testimony of [Geisinger's] witnesses and assume that their testimony is fact. That is not the case, and [Geisinger's] witnesses were deemed to overstate, exaggerate and misstate the impact of [Dr. Radziewicz's] alleged violation of the restrictive covenant at issue, [Dr. Radziewicz's] role as a hospitalist at Wilkes-Barre General Hospital [WBGH], and the allegation that [Dr. Radziewicz] "competes" with [Geisinger] as a hospitalist at Wilkes-Barre General Hospital (it has been deemed that he does not compete with [Geisinger] as a hospitalist at Wilkes-Barre General Hospital).
Trial Court Opinion, 5/21/2014, at 2.
The trial court's determinations were based upon its credibility determinations, and, where "the evidentiary record supports the trial court's credibility determination; we are bound to accept them." Samuel-Bassett v. Kia Motors of America, Inc., 34 A.3d 1, 32 (Pa. 2011). Accordingly, if the trial court's credibility determinations are supportable, those determinations would provide actual, not merely apparently, reasonable grounds, for the denial of the injunction. Therefore, I examine the record before the trial court.
To understand the trial court's ruling, one must understand Dr. Radziewicz's duties with both Geisinger and Advanced Inpatient Medicine (AIM). Dr. Radziewicz was employed by Geisinger for approximately 14 years as a primary care physician (PCP) specializing in family practice. Dr. Radziewicz was board certified in family practice prior to his employment with Geisinger. See N.T. Hearing, 12/17/2103 at 38. A PCP cares for the patient from all ages from pediatrics to geriatrics, throughout the span of life. Id., at 39. By definition, a PCP represents an ongoing relationship, potentially for decades, with each patient in the physician's practice. The evidence presented at the hearing demonstrated that Geisinger spent in excess of $65, 000.00 during the 14 years of Dr. Radziewicz's employment supporting, training, and helping to develop the Doctor's practice. Id. at 78. The evidence further demonstrated that Dr. Radziewicz had approximately 5, 400 patient contacts per year in his practice with Geisinger. Id. at 88.
On the other hand, a hospitalist, which is Dr. Radziewicz's present position at WBGH, does not have his or her own independent practice. Rather, the hospitalist is a doctor who works solely within a hospital, seeing patients who otherwise do not have an attending physician. Id. at 51-52. A hospitalist sees patients in one of three ways. First, when the patient enters the emergency room, requires inpatient care and either does not have a PCP or the PCP does not have hospital privileges, then the hospitalist will attend to the patient. Second, if the patient is in the hospital for another reason, such as surgery, and in the course of surgical after care, other treatment is needed. Finally, a patient can be admitted to the hospital by the PCP, but for whatever reason the PCP does not go the hospital. The hospitalist will then care for the patient. The primary mission of the hospitalist is to treat the patient while an inpatient and return the patient to the care of the PCP after discharge. Essentially, a hospitalist is a safety net provided by the hospital to make sure all inpatients have attending physicians, when those patients do not otherwise have a PCP or attending physician. Id. at 54.
Specifically, regarding AIM and WBGH, AIM provides WBGH five hospitalists who work shifts. N.T. Hearing, 2/12/2014, at 20. A patient can request to be seen by a specific hospitalist, but the request can only be honored if that hospitalist is currently on shift. N.T. Hearing 12/17/2013, at 56. Hospitalists do not have a practice that includes a caseload of patients; specifically, Dr. Radziewicz does not practice family medicine or work as a primary care physician. N.T. Hearing, 2/12/2014, at six. Patients are not recruited by either AIM or an individual hospitalist. Individual hospitalists are not advertised by AIM nor are they allowed to advertise. Id. at 9-10.
Dr. Steven Pierdon, the executive vice-president chief medical officer for Geisinger testified to the harm Geisinger would suffer when other PCPs, knowing Dr. Radziewicz was a hospitalist with WBGH, started referring patients to WBGH because of Dr. Radziewicz's association with that hospital. N.T. Hearing, 12/17/2013, at 76. Dr. Pierdon testified other PCPs would refer patients to WBGH, presumably rather than the Geisinger hospital, because of Dr. Radziewicz's reputation as a Geisinger trained physician. Id. Further, he testified that in addition to direct losses that might be attributable to Dr. Radziewicz's practice of medicine contrary to the restrictive covenant, disruptions in the local Geisinger practices might occur. Specifically, Dr. Pierdon testified:
If they're leaving outside of the market, it is less likely that patients will leave and follow that physician so you have a need to get a physician in there that you can rapidly fill and justify their cost and expense as opposed to if they set up within the area and the patients shift market.
N.T. Hearing, 12/17/2013, at 117.
However, in the nine weeks Dr. Radziewicz worked at WBGH prior to the hearing, Geisinger identified one Geisinger patient treated by Dr. Radziewicz. N.T. Hearing, 12/17/2013, at 90. That patient was brought to WBGH for emergency treatment and was admitted to the hospital on the recommendation of the ER physician. Id. at 94. Essentially, Geisinger admitted treatment by Dr. Radziewicz was nothing more than happenstance; there was no evidence or suggestion that the patient sought care at WBGH for any reason connected with Dr. Radziewicz. Nor was there any evidence that the patient terminated her association with Geisinger following her treatment by Dr. Radziewicz.
Because Geisinger's request for injunctive relief must fail if any of the six required elements are not proven, I need only to analyze the trial court's conclusion that Geisinger failed to demonstrate it was subject to "immediate and irreparable harm that cannot be adequately compensated by money damages." Gati v. University of Pittsburgh, supra. In determining such harm, case law also dictates that:
It is not necessarily the initial breach of a covenant which necessarily establishes the existence of irreparable harm but rather the threat of the unbridled continuation of the violation and the resultant incalculable damage to the former employer's business that constitutes the justification for equitable intervention.
Quaker City Engine Rebuilders, Inc. v. Toscano, 535 A.2d 1083, 1085 (Pa. Super. 1987).
Regarding harm, the trial court opined:
[T]here was significant testimony at the hearing on the issue of whether [Dr. Radziewicz] is competing with [Geisinger], which, in turn, bears upon the element of whether [Geisinger] stands to suffer irreparable harm if a preliminary injunction is not issued pending trial on the merits of a final injunction. If [Dr. Radziewicz] is not competing with [Geisinger], he is not causing any harm to [Geisinger]. Certainly, [Geisinger] presented testimony at the hearing from various witnesses testifying to the alleged great investment which [Geisinger] made to allegedly develop [Dr. Radziewicz's] skills as a physician and [Geisinger] made tenuous claims that [Dr. Radziewicz] was competing with [Geisinger] in his role as a hospitalist at Wilkes-Barre General Hospital. Considerations in deeming [Geisinger] to have failed to prove the element of the presence of irreparable harm are as follows: (a) The claims presented by [Geisinger] that [Dr. Radziewicz] is harming [Geisinger] due to the alleged great expense incurred by [Geisinger] in training [Dr. Radziewicz] are not accepted as credible. According to [Dr. Radziewicz's] testimony, which is accepted as credible, he attended medical school and underwent his residency training well before he signed the restrictive covenant agreement with [Geisinger], and that is deemed to be the lion's share of contribution to [Dr. Radziewicz's] present skills as a physician; (b) If [Geisinger] expended efforts and expense on [Dr. Radziewicz's] training, that money has already been spent, and withholding a preliminary injunction does not add any expense or harm to [Geisinger]; and (c) [Dr. Radziewicz's] testimony that he is a hospitalist who does not recruit patients, and whose patients are either admitted involuntarily through the emergency room, or by other primary physicians over whom he has no control, is accepted as credible. [Dr. Radziewicz's] medical practice, therefore, does not attract patients away from [Geisinger's] practice group, and does not compete with, or harm, [Geisinger's] business.
Trial Court Opinion, 5/21/2014, at 3-4.
Of these three factors, the third is clearly the most significant. The first two address Geisinger expenditures made throughout Dr. Radziewicz's tenure as a Geisinger employee. As the trial court noted in (b), these funds cannot be recouped by means of an injunction. It is the third aspect that provides the possibility of ongoing irreparable harm.
Despite Geisinger's fears that Dr. Radziewicz practicing as a hospitalist at WBGH would draw patients from Geisinger's practice, thereby representing the "unbridled continuation of the violation" of the covenant, producing the "resultant incalculable damage to Geisinger", see Quaker City v. Toscano, supra, Geisinger could document a single instance in which Dr. Radziewicz treated a Geisinger patient. However, there was no evidence to indicate the patient opted for the emergency room associated with Dr. Radziewicz or otherwise left Geisinger's practice. Geisinger presented no evidence regarding Dr. Radziewicz's personal reputation as a physician; therefore it would be pure speculation that any independent PCP would send a patient to WBGH because Dr. Radziewicz was one of a group of five hospitalists. Further, if it is the Geisinger training that is at issue, not Dr. Radziewicz's personal reputation, it is not logical that a referring physician would send a patient to WBGH, where one of five hospitalists are Geisinger trained, rather than to the nearby Geisinger hospital, where presumably all hospitalists are Geisinger trained. Accordingly, the trial court determination that Geisinger was not subject to immediate and irreparable harm is based upon apparently reasonable grounds. Under the same analysis, any claim of ongoing or potential damages is illusory.
I also note that before a party is entitled to the imposition of an injunction, it must also prove that whatever harm it is seeking to prevent "cannot be adequately compensated by damages." Gati v. Univ. of Pittsburgh, supra. The final paragraph of the non-compete covenant, written by Geisinger, contains a liquidated damages provision. Specifically,
I further understand that Penn State Geisinger Clinic will waive this restriction upon receipt of payment, in advance, of a sum equal to the greater of (a) my annualized base salary as of the date of this Agreement; or (b) my total compensation paid by Penn State Geisinger Clinic during the twelve calendar months immediately preceding the month in which my termination occurs, if I wish to continue my practice within the restricted area during the two years following my termination. Because the financial burdens Penn State Geisinger Clinic would endure are very difficult to ascertain and quantify, I agree that this is a fair amount of compensation to pay, as liquidated damages, not as a penalty, in the event that I wish to continue my practice within the restricted area within the two year period.
Penn State Geisinger Clinic-Physician Network Practice Agreement, 1/8/1998 (emphasis added).
Although by seeking an injunction, Geisinger is claiming the harm suffered cannot be adequately compensated by damages, Geisinger itself had arguably set determinable damages that would fairly compensate it in the event Dr. Radziewicz opened a medical practice in the restricted area.Accordingly, Geisinger's harm, if in fact it suffered any, has been set by contract. The majority expresses doubt that this clause operates as a liquidated damages clause. However, Geisinger, which drafted the contract, expressly labeled it as regarding liquidated damages. Based upon Geisinger's own representation, I do not believe such doubts are warranted.
The majority also notes that a liquidated damages clause does not bar specific performance of a contract unless the language of the agreement expresses that clear intent. Majority at 12. As quoted by the majority and recited above, the liquidated damages clause expressly waives the enforcement of the restrictive covenant upon payment of the damages indicated. I believe this specific waiver of the restrictive covenant expresses the clear intent to waive the restrictive covenant. Therefore, in addition to the other reasons why Geisinger is not entitled to injunctive relief, pursuant to Geisinger's own terms, the harm can be adequately compensated by monetary damages.
There is no evidence of immediate harm, there is only speculation of ongoing harm, and any concern about "unbridled continuation" of harm to Geisinger is unsupported. Therefore, Geisinger cannot prevail and is not entitled to injunctive relief. Even if Geisinger could demonstrate harm, Geisinger itself has set the upper limit of damages. Once again, this prevents Geisinger from obtaining the injunctive relief it seeks.
The trial court has properly determined that Geisinger has not suffered immediate and irreparable harm, and even if such harm could be demonstrated, it can be adequately compensated by damages. Therefore, I believe the denial of Geisinger's request for injunctive relief should be affirmed. Accordingly, I respectfully dissent.