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04/12/96 RICHARD B. BERLIN v. SARAH BUSH LINCOLN

April 12, 1996

RICHARD B. BERLIN, JR., M.D., PLAINTIFF-APPELLEE,
v.
SARAH BUSH LINCOLN HEALTH CENTER, AN ILLINOIS NOT-FOR-PROFIT CORPORATION, DEFENDANT-APPELLANT.



Appeal from Circuit Court of Coles County. No. 95MR7. Honorable Dale A. Cini, Judge Presiding.

As Corrected April 24, 1996. As Corrected August 27, 1996.

Justices: Honorable Robert J. Steigmann, J., Honorable Frederick S. Green, J., Specially Concurring, Honorable John T. McCULLOUGH, J., Dissenting. Justice Steigmann delivered the opinion of the court:

The opinion of the court was delivered by: Steigmann

The Honorable Justice STEIGMANN delivered the opinion of the court:

In January 1995, plaintiff, Richard B. Berlin, Jr., M.D., filed a complaint for declaratory judgment and a motion for summary judgment in which he sought to have a restrictive covenant contained in a general surgery employment agreement with the defendant, Sarah Bush Lincoln Health Center (Health Center), declared unenforceable. The Health Center filed a cross-motion for summary judgment. In June 1995, the trial court granted Dr. Berlin's motion for summary judgment, finding that the restrictive covenant was unenforceable because the Health Center, through its general surgery employment agreement with Dr. Berlin, was practicing medicine in violation of the statutory prohibition on the corporate practice of medicine.

The Health Center appeals, arguing that the trial court erred by (1) granting Dr. Berlin's motion for summary judgment on that basis, (2) denying the Health Center's cross-motion for summary judgment, and (3) finding that the restrictive covenant is unclear and ambiguous. We disagree with the Health Center's first argument and affirm.

I. BACKGROUND

In December 1992, the Health Center and Dr. Berlin entered into a general surgery employment agreement, whereby the Health Center employed Dr. Berlin to render medical services for five years. Section 2.3 of the employment agreement mandated that Dr. Berlin "devote his full working time and attention to the practice of medicine for the hospital." Section 9.1 of the employment agreement included a restrictive covenant, providing as follows:

"During the term of this Agreement, and any renewal period thereof, and for a period of two years thereafter, Physician agrees that Physician shall not, directly or indirectly, invest in, own, manage, operate, control, be employed by, participate in, or be connected in any manner with the ownership, management, operation, or control of any person, firm, or corporation engaged in competition with Hospital in providing health services or facilities within a 50[-]mile radius of Hospital."

In February 1994, Dr. Berlin resigned from the Health Center and became an employee of a Carle Clinic facility located approximately one mile from the Health Center. The Health Center filed a motion for injunctive relief against Dr. Berlin, and Dr. Berlin was subsequently enjoined from working for any competing health-care provider within a 50-mile radius of the Health Center.

Dr. Berlin appealed the preliminary injunction, and this court reversed and remanded the case, holding that the trial court had improperly denied Dr. Berlin's motion for substitution of judge. Sarah Bush Lincoln Health Center v. Berlin, 268 Ill. App. 3d 184, 189-90, 643 N.E.2d 276, 280-81, 205 Ill. Dec. 325 (1994).

In January 1995, Dr. Berlin filed a complaint for declaratory judgment and a motion for summary judgment in which he sought to have the restrictive covenant declared unenforceable. The Health Center filed a cross-motion for summary judgment. Both motions incorporated by reference the prior record entered in the preliminary injunction proceeding. In June 1995, after reviewing the evidence and hearing oral arguments, the trial court granted Dr. Berlin's motion for summary judgment.

II. THE SUMMARY JUDGMENT IN FAVOR OF DR. BERLIN

The Health Center argues that the trial court erred by granting Dr. Berlin's motion for summary judgment, specifically contending that the doctrine prohibiting the corporate practice of medicine does not apply to nonprofit hospitals because (1) the cases recognizing such a doctrine did not involve hospitals; (2) no legislative enactments subsequent to the Medical Practice Act of 1923 (1923 Act) (Ill. Rev. Stat. 1923, ch. 91, par. 1 et seq.), including the Medical Practice Act of 1987 (1987 Act) (225 ILCS 60/1 et seq. (West 1994)), specifically prohibit nonprofit hospitals from employing physicians; and (3) public policy concerns underlying the doctrine prohibiting the corporate practice of medicine do not apply to situations involving a licensed nonprofit hospital. The Health Center alternatively contends that if the 1987 Act prohibits the corporate practice of medicine, hospitals are exempt under section 4 of the 1987 Act (225 ILCS 60/4 (West 1994)) because they are licensed under the Illinois Hospital Licensing Act (Licensing Act) (210 ILCS 85/1 et seq. (West 1994)).

Summary judgment is appropriate when the pleadings, depositions, and affidavits, if any, show that no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. First of America Bank, Rockford, N.A. v. Netsch, 166 Ill. 2d 165, 176, 651 N.E.2d 1105, 1110, 209 Ill. Dec. 657 (1995); 735 ILCS 5/2-1005(c) (West 1994). On review, this court considers de novo the propriety of granting the motion for summary judgment ( Golla v. General Motors Corp., 261 Ill. App. 3d 143, 147, 633 N.E.2d 193, 196, 198 Ill. Dec. 731 (1994)), and we therefore determine whether Dr. Berlin was entitled to summary judgment as a matter of law (see Cates v. Cates, 156 Ill. 2d 76, 78, 619 N.E.2d 715, 716, 189 Ill. Dec. 14 (1993)).

A. Doctrine Prohibiting the Corporate Practice of Medicine

The Supreme Court of Illinois in Dr. Allison, Dentist, Inc. v. Allison, 360 Ill. 638, 196 N.E. 799 (1935), held that a corporation employing licensed dentists was engaging in the practice of dentistry in violation of section 18 of "An Act to regulate the practice of dental surgery and dentistry ***" (Ill. Rev. Stat. 1935, ch. 91, par. 72), and, therefore, had no legal right to enforce a restrictive covenant against a departing dentist. In so holding, the supreme court wrote the following:

"The practice of a profession is everywhere held to be subject to licensing and regulation under the police power and not subject to commercialization or exploitation. [Citation.] ***. The qualifications [to practice a profession] include personal characteristics, such as honesty, guided by an upright conscience and a sense of loyalty to clients or patients, even to the extent of sacrificing pecuniary profit, if necessary. *** No corporation can qualify." Allison, 360 Ill. at 641-42, 196 N.E. at 800.

One year later, the Supreme Court of Illinois in People v. United Medical Service, Inc., 362 Ill. 442, 454-55, 200 N.E. 157, 163 (1936), interpreted the 1923 Act (which read, in part, "no person shall practice medicine *** without a valid, existing license so to do" (Ill. Rev. Stat. 1923, ch. 91, par. 2), and held that a corporation practices medicine in violation of the 1923 Act when it employs physicians to practice medicine because a corporation cannot be so licensed. The supreme court rejected the corporation's contentions that (1) it was not practicing medicine, and (2) its fee arrangement, whereby patients paid fees directly to the corporation, did not interfere with the professional relationship between the patients and the licensed physicians who treated them in its clinic. United Medical Service, 362 Ill. at 455, 200 N.E.2d at 163.

In holding that corporations cannot be licensed to practice medicine, the supreme court also relied on its decision in Allison and wrote the following:

"The legislative intent manifest from a view of the entire law [the 1923 Act] is that only individuals may obtain a license thereunder. No corporation can meet the requirements ***.

*** 'To practice a profession,' the [Allison] court said, 'requires something more than the financial ability to hire competent persons to do the actual work. It can be done only by a duly qualified human being, and to qualify something more than mere knowledge or skill is essential.'" (Emphasis added.) United Medical Service, 362 Ill. at 454-56, 200 N.E.2d at 163, quoting Allison, 360 Ill. at 641, 196 N.E.2d at 800).

In the 60 years since its decision in United Medical Service, the supreme court has not directly addressed--or overruled or modified--its decision establishing the doctrine prohibiting the corporate practice of medicine.

B. Stare Decisis

The Health Center first contends that because Allison and United Medical Service --the decisions which recognized the prohibition on the corporate practice of medicine--involved general business corporations, the rule of stare decisis does not prevent the Health Center, as a nonprofit hospital corporation, from employing physicians. We disagree.

Although the Health Center correctly points out that United Medical Service and Allison involved general business corporations, the supreme court in United Medical Service clearly stated that, under the 1923 Act, only individuals may obtain a license to practice medicine and that no corporation can qualify. Thus, the supreme court's holding in United Medical Service constitutes a proscription against any type of corporate entity practicing medicine by employing licensed physicians, including nonprofit hospitals. We further note that while the Health Center repeatedly emphasized its nonprofit status in its briefs to this court, its counsel conceded at oral argument--with ...


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