TALLAHASSEE — The Florida Supreme Court has unanimously ruled that referral sources for home health service are a protected legitimate business.
The high court consolidated two cases involving home health companies for review. In the first, Almost Family Inc. accused Elizabeth White, a former employee, of violating a non-compete clauses when she accepted a job with a direct competitor after resigning. In the other, Americare Home Therapy Inc. alleged that its former employee, Carla Hiles, violated their non-compete clause for allegedly passing confidential information to another company, for whom she later worked.
White, however, had argued that the non-compete clause was not valid because home health care companies are not a "legitimate business interest" under Section 542.335 of the Florida Statutes.
Justice Fred Lewis, who penned the high court's decision, said that, by tradition, a certified home health care company (HHC) receives referrals from doctors and case managers for their clients in need of home-based assistance Regulated on state and federal levels due to Medicare funding,
"HHCs employ marketing representatives whose primary roles are to cultivate relationships with referral sources in the hope of securing future patient referrals,” according to the high court's ruling. “... The referral relationships are not exclusive and patients have the ultimate decision with regard to which HHC will be selected."
Lew side it was “undisputed that both White and Hiles engaged in conduct in violation of their non-compete employment contracts,” but what was in question was if HHC referral sources can be an authentic business interest that “is sufficient to support a restriction on competition in a contract,” according to the ruling.
Citing Borden v. E.-European Ins. Co. ( 2006), Lewis noted some items considered to be “legitimate business interest,” including trade secrets, strong relations among current or prospective patients, specialized training and “good will" from all involved, specifically for geographic and marketing purposes.
“Turning back to the statute, the plain language of Section 542.335 does not specifically list referral sources in the express terms," Lewis said in the opinion. "The statute states facially that it 'includes, but is not limited to.' The statute was never designed or intended to be an exhaustive list.”
The high court ruled that Section 542.335 “does not preclude recognizing referral sources as protected legitimate business interests."
Lewis said in the decision that there is an “indispensable relationship between referral sources and their undisputed legitimate business interests,” which makes Section 542.335 significant in "striking a delicate balance between legitimate business interests and a person’s inalienable right to work.”
Though Lewis and the panel decided on the protection of referral sources, they did not rule on the individual employee matters in the cases..
“We must remand each [case] for reconsideration in light of this decision," Lewis said in the decision. "The fact that referral sources can constitute a legitimate business interest does not automatically satisfy all possible factual issues.”