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Community Hospital Group4/5/2005
, the covenant in Karlin only prohibited patients' access to the defendant in a certain geographical area. Ibid. Second, and most important, the Court found that "Dwyer represents an exercise by the judicial branch of its unique constitutional responsibility for regulating the conduct of attorneys", ibid., in that the Supreme Court has exclusive responsibility to regulate the admission and discipline of attorneys whereas the State Board of Medical Examiners regulates physicians. Id. at 419-20. The Court observed that " either our statutes nor the regulations of the State Board of Medical Examiners, which in regulating physicians... serves a role similar to that of this Court in regulating attorneys, in any way restricts physicians from entering into restrictive covenants." Id. at 420-21.
The Karlin Court concluded that restrictive covenants between physicians are not per se unreasonable and unenforceable, and instead adopted the Solari test - "whether the covenant in question '... protects the legitimate interests of the employer, imposes no undue hardship on the employee, and is not injurious to the public.'" Id. at 422 (quoting Solari, supra, 55 N.J. at 576). The Court also provided a non-exhaustive list of relevant factors to consider when determining the enforceability of restrictive covenants among physicians. Id. at 423. Those factors include the time the employer-physician needs to rebuild the practice following the employee-physician's departure, the reasonableness of the geographic scope, whether the activities the departing physician is prohibited from engaging in are the same as those performed by the employer physician, the hardship on the employee and the reason for the departure, the likelihood that another physician in the area can provide the medical services left vacant by the departing physician and "the effect that enforcement of the covenant would have on the public interest." Id. at 423-24.
Writing for three dissenters, Justice Sullivan argued that restrictive covenants involving physicians should be held per se invalid as against public policy because of the nature of the physician-patient relationship. Id. at 425. He saw the same principles at work in the physician-patient relationships as in the attorney-client relationships. Id. at 427. He observed, both "are consensual, highly fiduciary and peculiarly dependent on the patient's or client's trust and confidence in the physician consulted or attorney retained." Ibid. Justice
Sullivan disagreed with the majority's characterization that Dwyer rested on the disciplinary rule and argued that the Court in Dwyer cited the rule to demonstrate the strength of the public policy weighing in favor of prohibiting the covenant. Ibid.
B.
Since Solari and Karlin, the test for determining the validity of restrictive covenants between physicians and restrictive covenants in the commercial context has not changed. Dr. More and Somerset argue for a deviation from that approach, emphasizing the similarities between the attorney-client and physician-patient relationships as asserted by Justice Sullivan. They claim that the field of medicine has changed since 1978 when Karlin was decided and that the AMA has declared restrictive covenants unethical. Further, they argue that no reported case has recognized that a hospital or other similar entity has a legitimate interest in protecting existing patient relationships. Therefore, they ask this Court to conclude that hospitals have no legitimate interests in precluding a physician from practicing medicine.
Just as the decision in Karlin was difficult and close, the decision whether to continue the Solari-Karlin approach is difficult. Both sides
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