Federal Suit by Ohio Physicians Challenging Noncompete Agreements Dismissed for Lack of Antitrust Standing

By: William F. Cavanaugh, Jr. & Colleen Anderson (Patterson Belknap)

Federal Judge Dismisses Antitrust Lawsuit Against Adena Health System

On April 29, 2024, a federal judge in the Southern District of Ohio dismissed a lawsuit filed by a group of physicians accusing Adena Health System of anticompetitive practices, including the use of noncompete clauses in their contracts. In the case of Cohen et al v. Adena Health System et al, the court found that the plaintiffs failed to demonstrate antitrust injury. The judge ruled that the allegations of harm to the broader market for orthopedic services were insufficient, and while the physicians’ personal difficulties in practicing or finding space to practice might satisfy Article III standing, they did not meet the criteria for antitrust standing. The opinion also expressed doubt that physicians, rather than patients or the government, were the appropriate parties to bring such claims.

Plaintiffs’ Claims and Defendants’ Motion

The plaintiffs, Dr. Brian Cohen, Dr. Aaron Roberts, and Dr. James Thompson, were previously employed by Adena Health System, a non-profit healthcare corporation operating hospitals in southern Ohio, and its affiliate, Adena Medical Group LLC. Their employment agreements included noncompete clauses preventing them from providing medical services in the eight surrounding counties for one year after leaving Adena, and from soliciting Adena’s patients or employees.

The plaintiffs intended to join a different healthcare group, OhioHealth, after their noncompete period expired. They resigned from Adena with 120 days’ notice, but Adena terminated them 30 days later, citing breaches of non-solicitation and confidentiality provisions in their contracts.

Before the federal lawsuit, Adena sued the doctors in state court for allegedly recruiting other Adena physicians to form a competing practice while still employed. The doctors counterclaimed under federal antitrust law, but this was dismissed due to lack of subject matter jurisdiction. The state court claims are ongoing.

Federal Lawsuit Allegations

In the subsequent federal lawsuit, the plaintiffs alleged that Adena had monopoly power in the eight-county area of Southern Ohio, being the dominant provider and the only hospital operator in certain counties. They claimed Adena violated Section 2 of the Sherman Act by maintaining its monopoly through “excessive non-compete restrictions” and by manipulating real estate transactions to block competitors from securing space for new practices. Additionally, the plaintiffs alleged that Adena required its physicians to refer patients for orthopedic services only to other Adena-employed physicians and that the termination and state court litigation against them was intended to discourage other healthcare entities from collaborating with them.

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