Medicare Compliance & Reimbursement

Top Missouri court upholds home health provider's contract.

A new court decision should make it easier to safeguard a home health agency's (HHA) patient base and financial interests when employees walk out the door.

The case is significant in that it addresses the use of non-compete agreements by HHAs, says Rick Temple, an attorney whose practice is based in Springfield, MO and who served as the plaintiff's attorney in the case, decided Aug. 8 by the Missouri Supreme Court.

The case will make it easier for Missouri HHAs to enforce their non-competes, says Temple. It will also serve to inform other states' legal decisions about enforceability.

Home health provider Oxford Healthcare took its former Joplin, MO office nursing supervisor LuAnn Helms and regional director Pearl Walker Copeland to court in 2000 to enforce non-compete agreements with the employees, according to a July 27 decision issued by the Missouri Court of Appeals, Southern District.

The two individuals, who acted primarily in management and supervisory functions, had signed a non-compete agreement stating that they would not directly or indirectly engage in business competitive to that of the HHA within a radius of 100 miles of the location in Missouri.

Perseverance Pays Off

A Missouri trial court originally upheld the non-competes but denied Oxford's claim for damages and the employees' counterclaims. Then, on July 27, 2005, an appeals court ruled that the agency's non-competes weren't enforceable because Oxford didn't have "protectable interests" at stake.

Oxford requested a transfer to the Supreme Court, asserting that their client list is a protectable interest. "The fact that such individuals qualified for and had their services paid for by Medicaid should not disqualify Oxford from protecting those client bases," says the request filed Aug. 11, 2005.

An agreement restricting former employees of an HHA from competing with their old employer is enforceable under state law, affirmed the state Supreme Court. The court also permitted an injunction to be issued against the former workers named in the case and an award of damages related to lost patients.

The case paves the way for the enforcement of non-competes in Missouri. And in other states courts can now look to the "persuasive authority" of the Missouri case, explains Temple.

Competition in home health makes non-competes especially relevant, says Robert Markette with Gilliland Markette & Milligan in Indianapolis. "You don't want your patients walking out the door with your employees," says Markette, noting that non-competes are under-used by HHAs. "An effective non-compete can keep that from happening."

For a summary of the decision in Healthcare Services of the Ozarks, Inc. d/b/a/ Oxford Healthcare v. Pearl Walker Copeland and LuAnn Helms, go to www.courts.mo.gov.