Learn about the legal challenges and importance of safeguarding patient lists in medical practice acquisitions.
October 12, 2019
M&A Stories
In the world of medical practice acquisitions, patient lists are golden. But what happens when a doctor tries to take that list post-sale? Let’s dive into a case that sheds light on this issue.
The Backstory:
Imagine this: an OB-GYN practice changes hands, and one of the selling doctors doesn’t leave on the best terms. In fact, they get terminated after the deal is sealed. The twist? This doctor decides to download a list of the patients they had seen during their time at the practice, intending to contact them once their non-solicitation agreement expires.
The Legal Battle:
Naturally, the buyer got wind of this plan and decided to take legal action. They sued the doctor for misappropriating a trade secret in a Maryland federal district court.
The doctor admitted that the patient list was indeed a trade secret but argued that they hadn’t misappropriated it under federal or state law. Their defense was that they hadn’t used or disclosed the list to anyone – yet. They did, however, admit that they planned to use it once their non-solicitation agreement no longer applied.
The Verdict:
The doctor tried to have the case dismissed through a summary judgment motion, but the court wasn’t having it. The court ruled that the doctor’s act of downloading the patient list as an Excel spreadsheet for personal use constituted improper acquisition of the buyer’s trade secret – a clear case of misappropriation.
Food for Thought:
Here’s the takeaway: Even if the doctor could compete with the buyer after their non-solicitation agreement ended, they couldn’t escape using the buyer’s trade secret – the patient list from their old practice.
In essence, this case serves as a reminder that when it comes to M&A in the medical field, protecting patient lists is paramount. It’s a cautionary tale for all involved – from smart entrepreneurs and business owners to accountants, wealth advisers, business brokers, and investment bankers – anyone considering entering the world of healthcare M&A.
Case Reference:
This case is referred to as Maryland Physician’s Edge, LLC v. Behram, Civil Action No. DKC 17-2756, United States District Court, D. Maryland (September 20, 2019)
By John McCauley: I help companies and their lawyers minimize legal risk associated with small U.S. business mergers and acquisitions (transaction value less than $50 million
Email: jmccauley@mk-law.com
Profile: http://www.martindale.com/John-B-McCauley/176725-lawyer.htm
Telephone: 714 273-6291
Check out my book: Buying Assets of a Small Business: Problems Taken From Recent Legal Battles
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