Noncompete clause unenforceable for physician who dissented to merger, court rules — 7 insights

The Colorado Court of Appeals ruled in favor of a physician who was being sued for allegedly violating his noncompete clause, Lexology reports.

Here's what you should know.

1. In April 2013, Michael Crocker, MD, became an employee and shareholder of Denver-based Greater Colorado Anesthesia, signing a noncompete clause in the process. The clause applied to practically the entire Denver metropolitan area.

2. If the clause was violated, Dr. Crocker would be liable for liquidated damages as calculated by a formula.

3. In January 2015, the shareholding physicians of GCA voted whether to approve or deny a merger. GCA would become part of a 90-physician corporation. The physicians would accept a 21.3 percent pay reduction and make a five-year employment commitment. In turn, they'd receive a substantial lump sum cash payment plus stock in the new company.

4. Dr. Crocker voted against the merger, left the practice and signed onto a new anesthesia group in the Denver area, in violation of the noncompete clause.

5. GCA sought to enforce Dr. Crocker's noncompete clause, seeking liquidated damages.

6. The Colorado Court of Appeals ruled Dr. Crocker's rights as a shareholder were directly related to his rights as a physician, and because the noncompete clause's inclusion area was so large, the clause was unreasonable. The court stated the group was not eligible for any damages, even if the noncompete clause was found to be enforceable.

7. The case could possibly be appealed to the Colorado Supreme Court, but it's unsure if GCA will appeal the decision.

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