## Facts

- A colorectal surgeon (employer) hired another colorectal surgeon (employee) under an employment contract containing restrictive covenants.
- The covenant barred the employee for two years after departure from (1) soliciting the employer’s patients and referral sources within 150 miles of any employer office and (2) opening a practice within 25 miles of specified hospitals or providing services at those hospitals.
- The employee resigned and opened an office next to the employer’s office, and the employer alleged the employee solicited the employer’s patients and referral sources.
- The employer sought a permanent injunction, asserting protectable interests in established patient and referral-source relationships.
- The employee argued the covenant was unenforceable because it suppressed ordinary competition and, given a regional scarcity of colorectal surgeons, would harm public access to specialized care.
- Trial evidence included that the employer’s practice had a multi-week wait for appointments, the employer had substantial on-call obligations, and restricting the employee’s practice would substantially reduce specialist availability in northeastern Kansas.

## Issues

1. Whether a physician noncompetition covenant may protect patient and referral-source relationships as a legitimate business interest rather than merely suppressing ordinary competition.
2. Whether the covenant’s two-year term and geographic/practice restrictions were reasonable and no greater than necessary to protect the employer’s interests.
3. Whether enforcing the covenant as written would injure public welfare by materially restricting access to specialized medical care.

## Decision

- The court affirmed in part and reversed in part the injunction enforcing the covenant.
- The court held enforceable the two-year duration and the restriction on soliciting the employer’s patients and referral sources within 150 miles.
- The court held unenforceable the 25-mile office restriction tied to specified hospitals and the broad prohibition on practicing at those hospitals because they were overbroad and injurious to public welfare.
- The court modified the injunction to remove the unreasonable location and hospital-practice limits while maintaining the enforceable anti-solicitation restraint.

## Legal Principles

- A noncompetition covenant ancillary to an employment contract is enforceable only if reasonable under the circumstances and not adverse to public welfare.
- A covenant must protect a legitimate business interest; a restraint whose sole purpose is to avoid ordinary competition is unreasonable and unenforceable.
- Employment noncompetes are strictly construed against the employer.
- For physician noncompetes, enforceability turns on: (1) protection of a legitimate business interest, (2) undue burden on the employee, (3) injury to public welfare, and (4) reasonableness of time and territory.
- Time and territorial restrictions must be no greater than necessary to protect the employer’s interests; a common duration (including two years) may be reasonable depending on the facts.
- Factual findings are reviewed for substantial competent evidence, while whether a covenant violates public policy is a legal question reviewed without deference.

## Conclusion

The court permitted a physician employer to protect established patient and referral-source relationships through a time-limited anti-solicitation restraint, but refused to enforce broader practice-location and hospital-access restrictions that effectively excluded a specialist from the market and threatened public access to needed care.


Graham v. Cirocco, 31 Kan. App. 2d 563, 69 P.3d 194 (Kan. Ct. App. 2003)