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Community Hospital Group12/29/2003
titutes a protectable interest as required in Karlin rests upon the assertion that an erosion of the patient base cannot be redressed through monetary damages. Plaintiff argues that"there is no way to calculate presently the future harm resultant from lost relationships because eventually there is a house of cards effect that can threaten the very existence of a practice, particularly for an institution that requires not only a minimum number of patients to survive but a diverse number of cases to support its research and teaching goals."
Defendant would minimize the force of Karlin because that case involved two physicians and the plaintiff physician in Karlin had a legitimate interest in protecting his own relationships with his patients. Defendant contends that because plaintiff here is an institution, not a physician, it cannot have patient relationships. Defendant argues that Karlin does not stand for the proposition that physician employers have the right to prevent former employee-physicians from treating their own patients, and that plaintiff's attempt to restrict his right to treat patients is intended only to prevent competition.
Defendant's contention that an institution does not have a legitimate interest in protecting its patient base under Karlin is not supported by law. While the employer in Karlin was also a physician, the Court does not appear to base its conclusion on this fact. A careful reading of the Court's opinion appears to suggest that it was the plaintiff's status as an employer, rather than as a physician, that was controlling. Indeed, the Court repeatedly referred to the plaintiff as"employer." Defendant concedes that Karlin recognized the legitimate interest the employer-physician had in protecting his relationship with his patients, but he argues that plaintiff is incapable of forming a similar relationship. That"interest" appeared to be in the context of business, however, rather than a doctor-patient relationship, since patients are always free to seek treatment from whomever they choose. Also instructive is the Court's citation of Whitmeyer Brothers, Inc. v. Doyle, 58 N.J. 25, 33 (1971), for the proposition that an"employer has a patently legitimate interest... in protecting his customer relationships." Karlin, supra, 77 N.J. at 417 (emphasis added). Finally, defendant's proposition that an institution cannot have patients, only customers, appears to be a distinction with little difference in this case, where the non-physician employer's services are essentially focused on the provision of medical care.
The trial court failed to provide any findings for its conclusion that the restrictive covenant did not protect any legitimate interests of plaintiff. We are persuaded, however, that such legitimate interests arise in protecting patient relationships. See Karlin, supra, 77 N.J. at 417. Plaintiff's evidence supports the conclusion that enforcement of the restrictive covenant is necessary to protect its patient and referral relationships. In the circumstances, the trial court misapplied its discretion in finding that plaintiff failed to demonstrate the existence of a legitimate interest under the first prong of the Karlin test.
D.
We note that the trial court found that plaintiff failed to satisfy its burden of showing that enforcement of the restrictive covenant would not impose an undue hardship on defendant. It stated:
Assuming, however, that there is a legitimate protectable interest, it would seem to me that that interest is more or less offset by the undue hardship on the employee and looking at it from a viewpoint most favorable to the plaintiff, the best that could be said, again, on this record, is that
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