J-A31012-14
2015 PA Super 95
GEISINGER CLINIC IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellant
v.
MARK M. RADZIEWICZ, D.O.
Appellee No. 505 MDA 2014
Appeal from the Order Entered February 24, 2014
In the Court of Common Pleas of Montour County
Civil Division at No(s): 449-2013
BEFORE: BOWES, J., OTT, J., and STABILE, J.
DISSENTING OPINION BY OTT, J.: FILED APRIL 24, 2015
Because I believe that the certified record demonstrates the trial court
based its decision on actual, not merely apparently, reasonable grounds, I
would affirm the denial of the preliminary and permanent injunction that
Geisinger Clinic sought against Mark M. Radziewicz, D.O. Accordingly, I
respectfully dissent.
Our scope of review “on an appeal from a decree either granting or
denying a preliminary injunction is to examine the record only to determine
if there were any apparently reasonable grounds for the action of the court
below.” Bryant v. Sling Testing, 369 A.2d 1164, 1167 (Pa. 1977) quoting
Lindenfelser v. Lindenfelser, 123 A.2d 626 (Pa. 1956) (emphasis added).
Further,
Our law permits equitable enforcement of employee covenants
not to compete only so far as reasonably necessary for the
protection of the employer. Bettinger v. Carl Berke
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Associates, Inc., 455 Pa. 100, 314 A.2d 296 (1974); Reading
Aviation Service Co. v. Berolet, 454 Pa. 488, 311 A.2d 628
(1973). However, where the covenant imposes restrictions
broader than necessary to protect the employer, we have
repeatedly held that a court of equity may grant enforcement
limited to those portions of the restrictions which are reasonably
necessary for the protection of the employer, Jacobson & Co.
v. International Environment Corp., 427 Pa. 439, 235 A.2d
612 (1967) (unanimous).
Sidco Paper Company v. Aaron, 351 A.2d 250 (Pa. 1976) (further citation
omitted)1.
There are six elements that must be established in order to obtain a
preliminary injunction. Accordingly, the failure to establish any of the six
elements requires the trial court to deny the injunction. Gati v. University
of Pittsburgh, 91 A.3d 723, 729 (Pa. 2014). The six elements are:
First, a party seeking a preliminary injunction must show that an
injunction is necessary to prevent immediate and irreparable
harm that cannot be adequately compensated by damages.
Second, the party must show that greater injury would result
from refusing an injunction than from granting it, and,
concomitantly, that issuance of an injunction will not
substantially harm other interested parties in the proceedings.
Third, the party must show that a preliminary injunction will
properly restore the parties to their status as it existed
immediately prior to the alleged wrongful conduct. Fourth, the
party seeking an injunction must show that the activity it seeks
to restrain is actionable, that its right to relief is clear, and that
the wrong is manifest, or, in other words, must show that it is
likely to prevail on the merits. Fifth, the party must show that
the injunction it seeks is reasonably suited to abate the
offending activity. Sixth, and finally, the party seeking an
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1
Following the Jacobson v. International citation, our Supreme Court
cited an additional 10 Pennsylvania Supreme Court decisions supporting the
limitation on employee covenants.
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injunction must show that a preliminary injunction will not
adversely affect the public interest.
Id. at 728.
Instantly, the trial court determined Geisinger had failed to meet
elements one, two and four. The trial court came to this conclusion because,
all of [Geisinger’s] arguments require an acceptance of the
credibility of the testimony of [Geisinger’s] witnesses and
assume that their testimony is fact. That is not the case, and
[Geisinger’s] witnesses were deemed to overstate, exaggerate
and misstate the impact of [Dr. Radziewicz’s] alleged violation of
the restrictive covenant at issue, [Dr. Radziewicz’s] role as a
hospitalist at Wilkes-Barre General Hospital [WBGH], and the
allegation that [Dr. Radziewicz] “competes” with [Geisinger] as a
hospitalist at Wilkes-Barre General Hospital (it has been deemed
that he does not compete with [Geisinger] as a hospitalist at
Wilkes-Barre General Hospital).
Trial Court Opinion, 5/21/2014, at 2.
The trial court’s determinations were based upon its credibility
determinations, and, where “the evidentiary record supports the trial court’s
credibility determination; we are bound to accept them.” Samuel-Bassett
v. Kia Motors of America, Inc., 34 A.3d 1, 32 (Pa. 2011). Accordingly, if
the trial court’s credibility determinations are supportable, those
determinations would provide actual, not merely apparently, reasonable
grounds, for the denial of the injunction.2 Therefore, I examine the record
before the trial court.
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2
The majority has correctly noted, “[b]ecause contract interpretation is a
question of law, this Court is not bound by the trial court’s interpretation.”
Majority at 8, n.2 (citations omitted). We are not instantly interpreting the
(Footnote Continued Next Page)
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To understand the trial court’s ruling, one must understand Dr.
Radziewicz’s duties with both Geisinger and Advanced Inpatient Medicine
(AIM).3 Dr. Radziewicz was employed by Geisinger for approximately 14
years as a primary care physician (PCP) specializing in family practice. Dr.
Radziewicz was board certified in family practice prior to his employment
with Geisinger. See N.T. Hearing, 12/17/2103 at 38. A PCP cares for the
patient from all ages from pediatrics to geriatrics, throughout the span of
life. Id., at 39. By definition, a PCP represents an ongoing relationship,
potentially for decades, with each patient in the physician’s practice. The
evidence presented at the hearing demonstrated that Geisinger spent in
excess of $65,000.00 during the 14 years of Dr. Radziewicz’s employment
supporting, training, and helping to develop the Doctor’s practice. Id. at 78.
_______________________
(Footnote Continued)
language of restrictive covenant. Dr. Radziewicz does not challenge the fact
that he was practicing within the restricted area. The main question before
the trial court was whether Geisinger was harmed by that fact. The law is
clear that if a party cannot demonstrate “immediate and irreparable harm
that cannot be adequately compensated by damages”, that party is not
entitled to injunctive relief. The determination of harm is not a question of
contract interpretation; it is a question of fact. To that end, Geisinger was
required to prove each of the six elements described in Gati, supra. The
trial court based its factual determinations regarding harm upon its
credibility determinations. Accordingly, I believe the trial court’s credibility
determinations are both salient and binding. If the only question to be
answered was whether Dr. Radziewicz opened his practice within the
restricted area in contravention to the employment contract, there would
have been no need to provide evidence regarding the six elements.
3
Dr. Radziewicz is employed by AIM, which has a contract with WBGH to
provide doctors to the hospital who perform the duties of a hospitalist.
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The evidence further demonstrated that Dr. Radziewicz had approximately
5,400 patient contacts per year in his practice with Geisinger. Id. at 88.
On the other hand, a hospitalist, which is Dr. Radziewicz’s present
position at WBGH, does not have his or her own independent practice.
Rather, the hospitalist is a doctor who works solely within a hospital, seeing
patients who otherwise do not have an attending physician. Id. at 51-52. A
hospitalist sees patients in one of three ways. First, when the patient enters
the emergency room, requires inpatient care and either does not have a PCP
or the PCP does not have hospital privileges, then the hospitalist will attend
to the patient. Second, if the patient is in the hospital for another reason,
such as surgery, and in the course of surgical after care, other treatment is
needed. Finally, a patient can be admitted to the hospital by the PCP, but
for whatever reason the PCP does not go the hospital. The hospitalist will
then care for the patient. The primary mission of the hospitalist is to treat
the patient while an inpatient and return the patient to the care of the PCP
after discharge. Essentially, a hospitalist is a safety net provided by the
hospital to make sure all inpatients have attending physicians, when those
patients do not otherwise have a PCP or attending physician. Id. at 54.
Specifically, regarding AIM and WBGH, AIM provides WBGH five
hospitalists who work shifts. N.T. Hearing, 2/12/2014, at 20. A patient can
request to be seen by a specific hospitalist, but the request can only be
honored if that hospitalist is currently on shift. N.T. Hearing 12/17/2013, at
56. Hospitalists do not have a practice that includes a caseload of patients;
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specifically, Dr. Radziewicz does not practice family medicine or work as a
primary care physician. N.T. Hearing, 2/12/2014, at six. Patients are not
recruited by either AIM or an individual hospitalist. Individual hospitalists
are not advertised by AIM nor are they allowed to advertise. Id. at 9-10.
Dr. Steven Pierdon, the executive vice-president chief medical officer
for Geisinger testified to the harm Geisinger would suffer when other PCPs,
knowing Dr. Radziewicz was a hospitalist with WBGH, started referring
patients to WBGH because of Dr. Radziewicz’s association with that hospital.
N.T. Hearing, 12/17/2013, at 76. Dr. Pierdon testified other PCPs would
refer patients to WBGH, presumably rather than the Geisinger hospital,
because of Dr. Radziewicz’s reputation as a Geisinger trained physician. Id.
Further, he testified that in addition to direct losses that might be
attributable to Dr. Radziewicz’s practice of medicine contrary to the
restrictive covenant, disruptions in the local Geisinger practices might occur.
Specifically, Dr. Pierdon testified:
If they’re leaving outside of the market, it is less likely that
patients will leave and follow that physician so you have a need
to get a physician in there that you can rapidly fill and justify
their cost and expense as opposed to if they set up within the
area and the patients shift market.
N.T. Hearing, 12/17/2013, at 117.4
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4
While Dr. Pierdon’s testimony is not absolutely clear, he appears to suggest
that if a doctor leaves the Geisinger practice and begins practicing in the
local area, that doctor’s patients are likely to follow, thereby costing
Geisinger time, effort, and money to rebuild the practice.
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However, in the nine weeks Dr. Radziewicz worked at WBGH prior to
the hearing, Geisinger identified one Geisinger patient treated by Dr.
Radziewicz. N.T. Hearing, 12/17/2013, at 90. That patient was brought to
WBGH for emergency treatment and was admitted to the hospital on the
recommendation of the ER physician. Id. at 94. Essentially, Geisinger
admitted treatment by Dr. Radziewicz was nothing more than happenstance;
there was no evidence or suggestion that the patient sought care at WBGH
for any reason connected with Dr. Radziewicz. Nor was there any evidence
that the patient terminated her association with Geisinger following her
treatment by Dr. Radziewicz.
Because Geisinger’s request for injunctive relief must fail if any of the
six required elements are not proven, I need only to analyze the trial court’s
conclusion that Geisinger failed to demonstrate it was subject to “immediate
and irreparable harm that cannot be adequately compensated by money
damages.” Gati v. University of Pittsburgh, supra. In determining such
harm, case law also dictates that:
It is not necessarily the initial breach of a covenant which
necessarily establishes the existence of irreparable harm but
rather the threat of the unbridled continuation of the violation
and the resultant incalculable damage to the former employer’s
business that constitutes the justification for equitable
intervention.
Quaker City Engine Rebuilders, Inc. v. Toscano, 535 A.2d 1083, 1085
(Pa. Super. 1987).
Regarding harm, the trial court opined:
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[T]here was significant testimony at the hearing on the issue of
whether [Dr. Radziewicz] is competing with [Geisinger], which,
in turn, bears upon the element of whether [Geisinger] stands to
suffer irreparable harm if a preliminary injunction is not issued
pending trial on the merits of a final injunction. If [Dr.
Radziewicz] is not competing with [Geisinger], he is not causing
any harm to [Geisinger]. Certainly, [Geisinger] presented
testimony at the hearing from various witnesses testifying to the
alleged great investment which [Geisinger] made to allegedly
develop [Dr. Radziewicz’s] skills as a physician and [Geisinger]
made tenuous claims that [Dr. Radziewicz] was competing with
[Geisinger] in his role as a hospitalist at Wilkes-Barre General
Hospital. Considerations in deeming [Geisinger] to have failed to
prove the element of the presence of irreparable harm are as
follows: (a) The claims presented by [Geisinger] that [Dr.
Radziewicz] is harming [Geisinger] due to the alleged great
expense incurred by [Geisinger] in training [Dr. Radziewicz] are
not accepted as credible. According to [Dr. Radziewicz’s]
testimony, which is accepted as credible, he attended medical
school and underwent his residency training well before he
signed the restrictive covenant agreement with [Geisinger], and
that is deemed to be the lion’s share of contribution to [Dr.
Radziewicz’s] present skills as a physician; (b) If [Geisinger]
expended efforts and expense on [Dr. Radziewicz’s] training,
that money has already been spent, and withholding a
preliminary injunction does not add any expense or harm to
[Geisinger]; and (c) [Dr. Radziewicz’s] testimony that he is a
hospitalist who does not recruit patients, and whose patients are
either admitted involuntarily through the emergency room, or by
other primary physicians over whom he has no control, is
accepted as credible. [Dr. Radziewicz’s] medical practice,
therefore, does not attract patients away from [Geisinger’s]
practice group, and does not compete with, or harm,
[Geisinger’s] business.
Trial Court Opinion, 5/21/2014, at 3-4.
Of these three factors, the third is clearly the most significant. The
first two address Geisinger expenditures made throughout Dr. Radziewicz’s
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tenure as a Geisinger employee. As the trial court noted in (b), these funds 5
cannot be recouped by means of an injunction. It is the third aspect that
provides the possibility of ongoing irreparable harm.
Despite Geisinger’s fears that Dr. Radziewicz practicing as a hospitalist
at WBGH would draw patients from Geisinger’s practice, thereby
representing the “unbridled continuation of the violation” of the covenant,
producing the “resultant incalculable damage to Geisinger”, see Quaker
City v. Toscano, supra, Geisinger could document a single instance in
which Dr. Radziewicz treated a Geisinger patient. However, there was no
evidence to indicate the patient opted for the emergency room associated
with Dr. Radziewicz or otherwise left Geisinger’s practice. 6 Geisinger
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5
Although factor (b) only specifically mentions money spent training Dr.
Radziewicz, the same is true of any money spent advertising Dr.
Radziewicz’s medial practice. An injunction today does not affect Geisinger’s
prior expenditures in any way. Therefore, an injunction does not prevent
any further harm to Geisinger in terms of these expenditures. Further, Dr.
Radziewicz did not voluntarily leave Geisinger’s employ, he was terminated.
Therefore, Geisinger knowingly and voluntarily incurred whatever loss it
suffered in training Dr. Radziewicz and in advertising his practice. Any such
costs are unrelated to where Dr. Radziewicz currently practices medicine.
Accordingly, the trial court’s ruling on these elements is based upon
apparently reasonable grounds.
6
In Quaker City v. Toscano, supra, a sales representative left Quaker
City and continued to use Quaker City’s customer list to solicit business.
There was evidence that 95% of 200 customers questioned had been
approached by Toscano. Here, as a Geisinger employed physician, Dr.
Radziewicz met with an undisclosed number of patients approximately 5,400
times per year. After leaving Geisinger’s employ, he treated one, unsolicited
patient in nine weeks. I cannot accept this as evidence of an “unbridled
continuation” of harm to Geisinger.
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presented no evidence regarding Dr. Radziewicz’s personal reputation as a
physician; therefore it would be pure speculation that any independent PCP
would send a patient to WBGH because Dr. Radziewicz was one of a group of
five hospitalists. Further, if it is the Geisinger training that is at issue, not
Dr. Radziewicz’s personal reputation, it is not logical that a referring
physician would send a patient to WBGH, where one of five hospitalists are
Geisinger trained, rather than to the nearby Geisinger hospital, where
presumably all hospitalists are Geisinger trained. Accordingly, the trial court
determination that Geisinger was not subject to immediate and irreparable
harm is based upon apparently reasonable grounds. Under the same
analysis, any claim of ongoing or potential damages is illusory.7
I also note that before a party is entitled to the imposition of an
injunction, it must also prove that whatever harm it is seeking to prevent
“cannot be adequately compensated by damages.” Gati v. Univ. of
Pittsburgh, supra. The final paragraph of the non-compete covenant,
written by Geisinger, contains a liquidated damages provision. Specifically,
I further understand that Penn State Geisinger Clinic will waive
this restriction upon receipt of payment, in advance, of a sum
equal to the greater of (a) my annualized base salary as of the
date of this Agreement; or (b) my total compensation paid by
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7
In footnote 3, the majority expressed its concern regarding the potential
consequences of the breach and opined I had taken a position contrary to
recited law, citing only page 7 of my dissent. I stand by my analysis on
pages 7 through 10 that Geisinger had failed to produce anything other than
speculation to support a claim of ongoing and potential consequences.
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Penn State Geisinger Clinic during the twelve calendar months
immediately preceding the month in which my termination
occurs, if I wish to continue my practice within the restricted
area during the two years following my termination. Because the
financial burdens Penn State Geisinger Clinic would endure are
very difficult to ascertain and quantify, I agree that this is a fair
amount of compensation to pay, as liquidated damages, not as a
penalty, in the event that I wish to continue my practice within
the restricted area within the two year period.
Penn State Geisinger Clinic-Physician Network Practice Agreement, 1/8/1998
(emphasis added).
Although by seeking an injunction, Geisinger is claiming the harm
suffered cannot be adequately compensated by damages, Geisinger itself
had arguably set determinable damages that would fairly compensate it in
the event Dr. Radziewicz opened a medical practice in the restricted area.8
Accordingly, Geisinger’s harm, if in fact it suffered any, has been set by
contract. The majority expresses doubt that this clause operates as a
liquidated damages clause. However, Geisinger, which drafted the contract,
expressly labeled it as regarding liquidated damages. Based upon
Geisinger’s own representation, I do not believe such doubts are warranted.9
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8
The majority notes this issue was not raised below. It is a well-settled
point of law that a decision affirming the trial court may be based upon any
evidence of record. Alderwoods (Pennsylvania), Inc., v. Duquesne
Light Co., 106 A.3d 27, 41 n.15 (Pa. 2014).
9
Even if one does not specifically label it as a liquidated damages clause,
the fact remains that Geisinger agreed to a specific sum it would accept to
waive the restrictive covenant.
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The majority also notes that a liquidated damages clause does not bar
specific performance of a contract unless the language of the agreement
expresses that clear intent. Majority at 12. As quoted by the majority and
recited above, the liquidated damages clause expressly waives the
enforcement of the restrictive covenant upon payment of the damages
indicated. I believe this specific waiver of the restrictive covenant expresses
the clear intent to waive the restrictive covenant. Therefore, in addition to
the other reasons why Geisinger is not entitled to injunctive relief, pursuant
to Geisinger’s own terms, the harm can be adequately compensated by
monetary damages.10
There is no evidence of immediate harm, there is only speculation of
ongoing harm, and any concern about “unbridled continuation” of harm to
Geisinger is unsupported. Therefore, Geisinger cannot prevail and is not
entitled to injunctive relief. Even if Geisinger could demonstrate harm,
Geisinger itself has set the upper limit of damages. Once again, this
prevents Geisinger from obtaining the injunctive relief it seeks.
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10
The trial court made a similar determination, stating Geisinger was
unlikely to prevail on the merits because it was simultaneously pursuing an
action at law in Luzerne County, seeking monetary damages. Because there
is nothing in the record to confirm this statement, we cannot accept this
explanation as a reasonable ground for denying the preliminary injunction.
Regardless, the liquidated damages clause allows for specific monetary
damages, just as an action at law.
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The trial court has properly determined that Geisinger has not suffered
immediate and irreparable harm, and even if such harm could be
demonstrated, it can be adequately compensated by damages. Therefore, I
believe the denial of Geisinger’s request for injunctive relief should be
affirmed. Accordingly, I respectfully dissent.
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