COMPREHENSIVE PSYCHOLOGY
SYSTEM, P.C. trading as
LifeSpan,
Plaintiff-Appellant,
v.
BRETT PRINCE, Ph.D,
Defendant-Respondent.
_________________________________
Submitted December 8, 2004 - Decided February 7, 2005
Before Judges Newman, Axelrad and Bilder.
On appeal from Superior Court of New Jersey,
Chancery Division, Monmouth County, C-274-03.
Richmond & Burns, attorneys for appellant (Michael R. Speck, of counsel and on
the brief).
No brief was filed on behalf of respondent.
The opinion of the court was delivered by
BILDER, J.A.D. (retired and temporarily assigned on recall).
The issue on this appeal is the enforceability of a restrictive covenant in
an employment contract for professional services by a licensed psychologist. Plaintiff Comprehensive Psychology
Systems, P.C., a corporation which provides professional neuropsychological service to individuals under the
trade name LifeSpan, appeals from an order of the Chancery Division which denied
its application to enforce a restrictive covenant limiting the ability of a former
employee, defendant Brett Prince, Ph.D, from practicing his profession within ten miles of
plaintiff's facility and from soliciting any of plaintiff's patients.
See footnote 1
The clause at issue reads as follows:
(a) Restrictions. During the term of and for two years following the termination
of this Agreement, Dr. Prince shall not solicit any patient of LifeSpan nor
solicit referrals from any referral source of LifeSpan, nor without approval remove any
property including patient charts from the offices of LifeSpan, nor employ any employee
of LifeSpan who has been employed by LifeSpan during the term of this
Agreement.
(b) During the term of this agreement, in the event of termination, then
for a period of two (2) years from date of termination, Dr. Prince
shall not practice within a ten (10) mile radius of any facility or
office location of LifeSpan existing at the time of termination and at any
hospital utilized by LifeSpan. The parties acknowledge that this geographic area constitutes the
geographical area in which LifeSpan's patients and sources of referral reside or maintain
their offices.
The trial judge refused to restrain Dr. Prince from contacting any patients or
contacting referral sources because he deemed the enforceability of these restrictions barred by
N.J.A.C. 13:42-10.16, a provision of the rules adopted by the Board of Psychological
Examiners. The provision reads as follows:
A licensee shall not participate in offering or making a partnership or employment
agreement that restricts the right of a licensed health care professional to practice
the licensed profession after termination of the relationship, except an agreement concerning benefits
upon retirement.
On appeal plaintiff contends the trial judge misconstrued the regulation that properly interpreted
the language permits the type of non-competitive arrangement defendant entered into with plaintiff.
Alternatively, plaintiff contends that the regulation was amended effective April 5, 2004, and
in its present form clearly permits such non-competitive agreements. In its present form
it reads:
A licensee shall not enter into any business agreement that interferes with or
restricts the ability of a client to see or continue to see his
or her therapist of choice.
I.
Karlin v. Weinberg,
77 N.J. 408 (1978), rejecting a per se rule of
unenforceability, held that restrictive covenants ancillary to employment contracts between physicians are enforceable
to the extent that they protect a legitimate interest of the employer, impose
no undue hardship on the employee, and are not injurious to the public.
Id. at 411-412. Although defendant is not technically a physician, plaintiff contends the
principles of Karlin apply equally to psychologists and make this agreement enforceable. We
disagree for two reasons.
a.
Karlin dealt with general rules as to restrictive covenants in the absence of
special regulations governing the profession involved. More akin to the facts before us
is Dwyer v. Jung,
133 N.J. Super. 343 (Ch. Div. 1975), affd o.b.,
137 N.J. Super. 135 (App. Div. 1975), a case in which Judge Kimmelman
noted the personal, highly fiduciary nature of the attorney-client relationship and held that
restrictive covenants between attorneys are per se unreasonable and unenforceable as injurious to
the public interest. Id. at 346-347.
The Karlin court distinguished Dwyer by noting, as had Judge Kimmelman, that restrictive
covenants are barred by the Disciplinary Rules governing the profession, DR2-108(a).
[T]his court, in exercising its supervisory role over attorneys has determined that restrictive
covenants among lawyers are detrimental to the public interest. The regulations governing physicians
within this State, however, do not contain any restriction similar to DR2-108(a). Neither
our statutes nor the regulations of the State Board of Medical Examiners, which
in regulating physicians, serves a role similar to that of this Court in
regulating attorneys, in any way restricts physicians from entering into restrictive covenants.
[Karlin, supra, 77 N.J. at 420-421]
In our case, as in Dwyer, the relevant Board, here the State Board
of Psychological Examiners, has adopted a regulation restricting psychologists from entering into restrictive
covenants.
We are satisfied that the regulation in effect at the time of the
decision in the Chancery Division, N.J.A.C. 13:42-10.16, was intended to restrict psychologists from
entering into restrictive covenants much as DR2-108(a) restricted attorneys. Indeed, in adopting the
regulation, the Board of Psychological Examiners described it as a ban on restrictive
covenants which is modeled generally on the Rules of the New Jersey Supreme
Court, citing RPC 5.6, the contemporary analog of DR2-108(a).
26 N.J.R. 4739.
Nor do we find the analysis altered by the Board's adoption of new
language in 2004, subsequent to the trial. We are satisfied that the new
regulation merely articulates the same restriction in language that shifts the focus of
concern from the rights of the psychologist to the rights of the patient.
Moreover, retroactive application of an administrative rule is not favored, Citizens v. Dept.
of Env. Protection,
252 N.J. Super. 62, 76 (1990), affd,
126 N.J. 391
(1991), and there is no evidence of any intent on the part of
the Board to apply the 2004 version retroactively. Twiss v. State, Dept. of
Treasury,
124 N.J. 461, 466-467 (1991).
b.
We also are persuaded that, apart from the existence of the regulations, the
nature of the practice of psychology and the uniquely personal patient-psychologist relationship forbid
any restrictions which might interfere with an ongoing course of treatment. We do
not believe it is sufficient to say that the psychologist can continue to
treat patients who seek out the doctor. We perceive that a psychologist who
changes his office location, voluntarily or involuntarily, has a duty to inform patients
of the change and the new location and phone number. See Paula Berg,
Judicial Enforcement of Covenants Not to Compete Between Physicians: Protecting Doctors' Interests at
Patient's Expense,
45 Rutgers L. Rev., 1, 9-10 (1992). To do otherwise may
be akin to abandonment. Grant v. Douglas Women's Clinic, P.C.,
580 S.E.2d 532,
533 (Ga. Ct. App. 2003)(before unilaterally withdrawing from treating a patient, a doctor
must provide reasonable notice of withdrawal to enable the patient to obtain substitute
care);
45 Rutgers L. Rev. at 13; C. T. Drechsler, Annotation, Liability of
Physician Who Abandons Case,
57 A.L.R.2d 432, 439 (1958).
We are satisfied the limitations plaintiff seeks to enforce against defendant interfere with
a critical patient-psychologist relationship and with the right of the patient to continued
treatment from that psychologist. We agree with the trial judge; they cannot be
enforced.
Affirmed.
Footnote: 1
Plaintiff's Notice of Appeal encompasses other issues however since this is the
only issue briefed, all other issues are deemed abandoned. Pressler, Current N.J. Court
Rules, Comment to Rule 2:6-2 at 590 (2004).