United States: Are Referral Sources Protectable Under Florida Law?

The question of whether referral sources constitute legitimate, protectable business interests under Florida's Covenants Against Unfair Competition statute, Fla. Stat. § 542.335 (2014), is likely heading to the Florida Supreme Court to be decided, following two conflicting decisions by separate appellate courts as 2015 came to a close.

In a decision released December 31, 2015, Florida's Fifth District Court of Appeal ruled that referral sources are not legitimate, protectable business interests in the case of Carla Hiles v. Americare Home Therapy, Inc., Etc., Case No. 5D15-9, overturning the trial court's entry of a temporary injunction in favor of American Home Therapy, Inc., d/b/a Americare Home Health ("Americare"). The decision cited as precedent the 5th District's own identical decision a decade earlier, in Florida Hematology & Oncology v. Tummala, 927 So.2d 135 (Fla. 5th DCA 2006). However, the 5th District's decision in December directly conflicts with a decision rendered a month earlier, on November 18, 2015, by the Florida 4th District Court of Appeal in Infinity Home Care, L.L.C. v. Amedisys Holding, LLC., 40 Fla. L. Weekly D2589b (November 18, 2015). In Infinity Home Care, the 4th DCA held that referral sources may be a legitimate business interested under Fla. Stat. §542.335, and certified conflict with Tummala.

In Americare, the facts were largely not in dispute. Hiles worked as a home health liason for Americare in Volusia County, Florida. In that role, Hiles was responsible for soliciting referrals of patients to Americare from their treating physicians, in order that Americare could provide in-home patient care services for various medical needs, including nursing, physical therapy, occupational therapy, speech therapy, medical social work and home health aids. On November 7, 2011, as part of her acceptance of employment with Americare, Hiles executed and entered into a Non-Compete, Non-Solicitation and Nondisclosure Agreement (the Non-Compete"), which asserted that Americare's business "depends on referral sources," including health facilities and physicians, and described Hiles' role as a "liason" was one forging relationships with such referral sources. The Agreement further asserted that Hiles would be privy to confidential information relating to Americare's business and would develop relationships with existing and potential referral sources. Under the relevant terms of the "Non-Solicitation" provisions of the Agreement, Hiles agreed that during her employment with Americare and for 12 months thereafter she would not "market or promote home health services to any health facility, physician, or referral source to whom any Employee of the Company marketed or promoted Americare's home health services during the final 12 months of (Hiles') employment with Americare Home Health."

In 2014, Hiles was approached by a competitor of Americare, Halifax Health Services, Inc., d/b/a Doctor's Choice ("Doctor's Choice") regarding employment. On October 2, 2014 Hiles transferred documents from her work email at Americare to her personal e-mail account. The next day, on October 3, 2014, Hiles tendered a resignation letter to Americare. However, throughout that day, Hiles continued sending Americare data in emails to her personal email account. On October 6, 2014, Americare advised Hiles her employment would end that day. And, on that same date, Hiles began employment with Doctor's Choice. Both before and after her employment ended at Americare, Hiles continued to send email data from Americare's business computers to her personal email account. Americare filed a multi-count complaint against Hiles, including a count for temporary injunctive relief to stop her from violating the restrictive covenants of her Non-Competition Agreement.

After a two-day evidentiary hearing, the trial court pronounced that it would grant the motion for injunctive relief, finding the Tummala case was factually distinguishable. The trial court had found, in relevant part, that Hiles had access to and obtained Americare's confidential information and trade secrets, that she learned the identify of Americare patients as well as the business partners/referral sources with whom Americare worked, that the non-competition covenants were supported by legitimate business interests, including referral sources, that the restrictive covenants were necessary to protect the legitimate business interests, and were reasonable in scope. Of particular concern to the trial court was that even after leaving Americare's employment, Hiles continued to access and utilize Americare's confidential business information to compete against Americare, on behalf of her new employer. In that respect, the trial court found Hiles actions distinguishable from those of the defendant in Tummala.

The 5th District Court of Appeals, however, found that the facts in Americare were not distinguishable from Tummala and that the plaintiffs in each case attempted to protect the same "business interests," namely referring physicians. In Tummala, the court ruled that:

"To accept referring physicians as a statutory 'legitimate business interest' would completely circumvent the clear statutory directive that 'prospective patients' are not to be recognized as such. . . . To qualify as a 'legitimate business interest' a 'relationship' with a 'prospective patient' must be substantial, and one with a specific, identifiable individual, and the lack of such a relationship with a patient does not become a legitimate business interest simply by virtue of being referred by a physician."

Following Tummala, the 5th DCA held again that unidentified prospective patients, and correspondingly referred physicians, do not qualify as legitimate business interest for the purpose of enforcing restrictive covenants.

By contrast, the 4th DCA, in Infinity Home Care, L.L.C. v. Amedisys Holding, LLC, found that referral sources may be a legitimate business interest under § 542.335, and certified conflict with Tummala. The 4th DCA ruled that because the statute did not identify the list of legitimate business interests as an "exclusive list," it would be improper to construe narrowly § 542.335 to exclude referral sources simply because they were not specifically included in the five interests listed. The contract at issue in Infinity Home Care (as did the one in Americare) specifically included referral sources as a protectable business interest, and therefore the court ruled they could be construed and protected as one.

The 5th DCA's decision in Americare will not be final until the time expires for either party to file a motion for rehearing and disposition thereof. Once final, it is possible that Americare will appeal, thus placing the issue before the Florida Supreme Court to resolve the conflict between the district courts. The final decision will have significant implications to the future enforcement of restrictive covenants under Florida law, and could conceivably lead to a revision of Florida's restrictive covenant statute to identify and include "referral sources" as legitimate, protectable business interests.

Carla Hiles v. Americare Home Therapy.pdf (109.18 kb)

INFINITY HOME CARE, LLC v. AMEDISYS HOLDING, LLC.pdf (200.99 kb)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions