New Brunswick, N.J.-based St. Peter’s Healthcare System’s Oct. 14 lawsuit against West Orange, N.J.-based RWJBarnabas Health and former board member Maureen Cernadas, MD, is about one OB-GYN group in central New Jersey. It also shows how health systems compete for physicians as fewer practices stay independent, and what legal options are left when a group leaves.
St. Peter’s alleges that Dr. Cernadas negotiated with RWJBarnabas for nearly two years while sitting on its board, without disclosing a conflict. She resigned from the board April 15. St. Peter’s also alleges RWJBarnabas misused confidential information from the two systems’ failed merger talks. RWJBarnabas denies the allegations.
Five takeaways for physician workforce strategy:
1. Independent practices are scarce and contested. As of Jan. 1, 2026, 82% of U.S. physicians were employed by hospitals or corporate entities, according to a Physicians Advocacy Institute and Avalere Health report. Hospitals and corporate entities owned 63.9% of physician practices. Brunswick Hills OB-GYN was one of the practices outside both systems: Axia Women’s Health owned it, not St. Peter’s. Even so, St. Peter’s says patients tied to the group brought in about $28 million in net patient revenue for the system in 2025. In May, the group’s nine physicians left Axia to form Mid-Jersey OBGYN Partners, a joint venture with RWJBarnabas.
2. Without an employment contract, systems turn to other claims. Saint Peter’s did not employ Dr. Cernadas, so it had no noncompete to enforce. Its claims are breach of fiduciary duty, aiding and abetting, civil conspiracy, unfair competition and breach of contract. Its main hook is her board seat. Axia, which did own the practice, is pursuing different claims. In May counterclaims, it accused the physicians, RWJBarnabas and three RWJBarnabas executives of misappropriating trade secrets and soliciting 31 staff members.
This kind of case isn’t new. In 2021, the Medical University of South Carolina sued HCA Healthcare and six departing head and neck physicians, alleging they sought case logs, patient lists and other confidential information to benefit HCA-owned Trident Medical Center, according to WCSC.
3. Noncompetes are getting harder to enforce. Nine states have restricted or voided physician noncompetes since 2025, according to a June analysis from law firm Maynard Nexsen. The Federal Trade Commission withdrew its defense of its nationwide noncompete ban, which courts had blocked, in September 2025. It then sent warning letters to healthcare employers telling them to review their agreements, and said it would pursue cases individually.
New Jersey still enforces reasonable physician noncompetes under a 2005 state Supreme Court ruling, Community Hospital Group v. More, which weighs whether a restriction harms the public. A bill that would make most physician noncompetes in the state unenforceable, S4068, was reintroduced in January 2025.
As these cases show, fiduciary-duty, trade-secret and nonsolicitation claims are filling the gap as noncompetes weaken.
4. Failed mergers leave rivals with sensitive data. The FTC sued to block the St. Peter’s-RWJBarnabas merger, and the talks ended in 2022. St. Peter’s says confidentiality obligations from those talks still bind RWJBarnabas. Two other disputes from Becker’s Oct. 20 roundup of five physician practice fights follow the same pattern:
- Ellis Medicine v. St. Peter’s Health Partners. Schenectady, N.Y.-based Ellis Medicine is fighting Albany, N.Y.-based St. Peter’s Health Partners over 27 cardiologists after the two systems ended nearly six years of merger talks in June.
- South Texas Spinal Clinic v. Surgery Partners. San Antonio-based South Texas Spinal Clinic alleges Brentwood, Tenn.-based Surgery Partners used financial and physician productivity data from acquisition talks to recruit its highest-revenue physicians.
5. Whole groups are leaving, not individual physicians. In all three cases, a team moved together. Nine OB-GYNs and 31 staff members left Axia. Twenty of the 27 cardiologists in the Ellis dispute resigned from St. Peter’s, and Ellis has signed 22 cardiologists, including two outside recruits, to start Jan. 1, 2027. Ellis alleged in its lawsuit that procedures generating about $75 million in annual revenue could be redirected. In Texas, four physicians left South Texas Spinal Clinic for the Surgery Partners affiliate.
The stakes are high in obstetrics. The March of Dimes counted at least 96 publicly reported labor and delivery unit closures across 35 states from January 2024 to May 2026. Hospitals have cited staffing shortages, financial pressure and declining birth volume. The Brunswick Hills group plans to move its deliveries to RWJBarnabas after January 2027.
“These allegations are without merit,” George Helmy, executive vice president and chief corporate affairs officer of RWJBarnabas, told Becker’s. “We will respond in court, where this matter belongs.”
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