The New York Attorney General’s Antitrust Bureau said the legal fight between Schenectady, N.Y.-based Ellis Medicine and Albany, N.Y.-based St. Peter’s Health Partners Medical Associates over 27 cardiologists likely suppresses labor competition, pointing the court to the state’s antitrust law.
In a Sept. 18 letter to Justice Michael Cuevas of Schenectady County Supreme Court, Elinor Hoffmann, chief of the Antitrust Bureau, said the nonsolicitation agreement at issue restricts competition for labor between “two rival medical facilities” and that the case “implicates the Donnelly Act and New York’s strong public interest in free competition.” The attorney general’s office is not a party to the case, according to The Daily Gazette.
“Nonsolicitation agreements therefore harm workers by suppressing employee compensation, limiting employee mobility, and depriving employees of job opportunities,” Ms. Hoffmann wrote.
She pointed to a 2025 enforcement action in which a New York court invalidated a nonsolicitation agreement as “per se anticompetitive activity” under the Donnelly Act, and cited case law holding that New York courts take a strict approach to enforcing restrictive covenants in employment. She asked the court to “consider the claims at issue here against this critical statutory and legal background.”
The dispute began in August, when Ellis sued St. Peter’s, alleging the physician group’s noncompete provisions illegally prevent the cardiologists from working with Ellis once their current contracts end. The lawsuit followed the two organizations’ decision in June to end six years of merger talks. St. Peter’s contends a separate provision of the parties’ professional services agreement bars Ellis from recruiting its employees, and earlier this month requested a temporary restraining order to stop Ellis from recruiting its cardiologists.
In a Sept. 23 statement shared with Becker’s, Ellis restated its stance on physician mobility.
“From day one, Ellis has taken the position that doctors should be free to choose where they work and who they work for,” the health system said. “We believe patients and communities are best served when healthcare organizations compete for talent rather than relying on noncompete or nonsolicitation agreements to limit those choices.”
Ellis also reiterated that the cardiology services agreement between the two organizations “specifically anticipated the possibility that the relationship could one day end,” and that the agreement preserves its ability to contract directly with the physicians to keep cardiology services available in Schenectady and surrounding communities.
“We remain confident in our position and look forward to addressing these issues through the legal process,” Ellis said.
In a statement shared with Becker’s, Steven Hanks, MD, CEO of St. Peter’s Health Partners, said that “St. Peter’s offered an approach that would have allowed cardiology services to continue at Ellis. Ellis rejected that offer.”
“We were also disappointed to learn the extent of the efforts made to undermine our good faith attempts to reach a solution. Two physician leaders in positions of trust broke that trust by providing confidential business information, including confidential employment and compensation information of their fellow physicians, to Ellis leadership for recruitment purposes,” he continued. “Such conduct could not go unaddressed; we have an obligation to protect our business and employee information.”
He added that “nothing has changed” for patients and that any future changes to their cardiologists’ office locations will be managed by St. Peter’s to avoid disruptions to care.
“We know that competition for physicians is real and rebuilding will take time. While we continue to grow our cardiovascular team, we are committed to doing so with integrity and in a manner consistent with our values,” Dr. Hanks said. “At the same time, we strongly believe a collaborative solution is in the best interest of the patients and communities we serve.”
At the Becker’s 32nd Annual Meeting: The Business and Operations of ASCs, taking place October 29-31 in Chicago, ASC leaders, surgeons and healthcare executives will explore strategies to drive growth, enhance operational performance, navigate reimbursement challenges and prepare for the future of ambulatory surgery. Apply for complimentary registration now.
