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Monmouth Radiologists, P.A. v. Monmouth Medical Center

A-2813-06T3 (N.J. Super. App. Div. 2008) (Unpublished)

NON-COMPETITION — Absent a specific agreement barring a customer from hiring a former employee or owner of a company with whom it has been doing business, a customer is free to do so.

A radiology practice had an agreement with a nearby hospital to provide its services. After two successive five year contract terms, the practice continued to provide service without a written contract. Attempts by the parties to reach a new written agreement failed. Two former members of the radiology practice then became radiologists for the hospital, one of whom later became chairman of the hospital’s radiology department. Subsequent attempts by the hospital and the radiology practice failed to produce an agreement, mainly over the hospital’s request that the realty company owned by the partners of the radiology practice close a particular radiology imaging center because it conflicted with the hospital’s plans to expand its own program. After a final attempt to reach agreement failed, the radiology practice agreed that the hospital could contract with other parties for radiology services. The hospital entered into an exclusive service agreement with an imaging practice owned by the same two former members of the radiology practice who joined the hospital’s radiology department.

The original radiology practice sued the hospital, two hospital officials, and the two former members of the radiology practice. The lower court dismissed the claims against the hospital and its officials. The claims against the members of the imaging practice were subsequently settled. The radiology practice appealed the summary judgment dismissal of its claims against the hospital and the two officials. The Court found that there was no proof of a contract or of any contractual provisions that prevented the hospital from entering into an agreement with a party other than the radiology practice for radiology services. Thus, the lower court’s summary judgment dismissal of the radiology practice’s claims was affirmed.

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