Schenectady, N.Y.-based Ellis Hospital has sued Albany, N.Y.-based St. Peter’s Health Partners Medical Associates, alleging the physician group is using noncompete agreements to prevent 27 cardiologists from joining Ellis.
The complaint was submitted Aug. 12 in New York Supreme Court in Schenectady County.
Here are six things to know:
1. The dispute centers on 27 cardiologists and a professional services agreement. The physicians are part of the practice formerly known as Cardiology Associates of Schenectady (N.Y). The group, which also includes 15 physician assistants, sees more than 50,000 patients annually, according to the complaint. St. Peter’s Health Partners Medical Associates acquired the practice in 2021 and became the cardiologists’ employer. The physicians continued practicing at Ellis under a professional services agreement between the organizations.
2. Ellis alleges its agreement gives it the right to contract with the cardiologists after termination. St. Peter’s Health Partners Medical Associates notified Ellis on June 15 that it was terminating the cardiology agreement effective Dec. 14. Ellis points to a provision stating that after termination or expiration, the hospital is free to contract for cardiology services with the medical group, its cardiologists or other qualified physicians. Ellis alleges the agreement also required the medical group to ensure its employment contracts with the cardiologists were consistent with that provision.
3. The hospital alleges newer physician contracts violate those terms. St. Peter’s Health Partners Medical Associates provided the cardiologists with new employment agreements effective Jan. 1, 2026, according to the complaint. Ellis alleges the agreements contain noncompete provisions that would prevent the physicians from working for Ellis for one year. The hospital further alleges St. Peter’s has threatened to enforce the provisions.
4. Ellis says roughly $75 million in annual revenue could be affected. The hospital alleges that if it cannot employ the cardiologists, procedures currently generating about $75 million in annual revenue could be redirected elsewhere. Ellis reported about $50 million, or 50 days, of cash on hand as of June and about $70 million in debt. The hospital alleges that if its cash on hand falls below 20 days, it may have to begin bankruptcy planning and engage the New York State Department of Health regarding a potential closure process. Ellis also said the loss of cardiology could affect its emergency, critical care, pulmonary and other services.
5. Ellis is seeking damages and an injunction. The complaint asserts three causes of action: breach of contract and specific performance; tortious interference with prospective business relations; and declaratory judgment and injunctive relief. Ellis is asking the court to declare the disputed noncompete provisions unenforceable as applied to the hospital and to bar St. Peter’s Health Partners Medical Associates from interfering with Ellis’ efforts to hire the cardiologists after the professional services agreement terminates.
6. The lawsuit follows the end of Ellis and St. Peter’s proposed combination. The organizations said June 22 they had mutually agreed to end nearly six years of merger discussions and conclude agreements supporting their collaboration. Their management and professional services agreements are set to end Aug. 16, and Ellis has been evaluating other strategic partnership options.
A St. Peter’s Health Partners spokesperson provided the following statement to Becker’s: “St. Peter’s Health Partners Medical Associates (SPHMA) denies these allegations and will vigorously defend itself in court.”
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