Bloomington Urological Associates v. Scaglia

NO. 4-96-1018

IN THE APPELLATE COURT

OF ILLINOIS

FOURTH DISTRICT

BLOOMINGTON UROLOGICAL ASSOCIATES, SC, ) Appeal from
Plaintiff-Appellee, ) Circuit Court of
v. ) McLean County
BENNETT SCAGLIA, M.D., ) No. 96L128
Defendant-Appellant. )
) Honorable
) W. Charles Witte,
) Judge Presiding.
_________________________________________________________________

PRESIDING JUSTICE STEIGMANN delivered the opinion of

the court:

In September 1996, the trial court entered an agreed
order between defendant, Bennett Scaglia, M.D., and plaintiff,
Bloomington Urological Associates, SC (Bloomington Urological),
respecting a covenant not to compete. In December 1996, the
court found Scaglia in indirect civil contempt for violating the
agreed order. Scaglia appeals, arguing that (1) the court's
finding of contempt was against the manifest weight of the evi-
dence; and (2) the court improperly altered the terms of the
agreed order after finding him in contempt. Because we agree
with Scaglia's first argument, we reverse.
I. BACKGROUND
In May 1994, Scaglia and Peoria Urological Associates,
SC (Peoria Urological), entered into an employment agreement, and
in June 1996, Peoria Urological assigned the agreement to
Bloomington Urological. Section 5.2(d) of the employment agree-
ment provided that upon termination of his employment, Scaglia
would not "engage in the [b]usiness" from any office located
within a 50-mile radius of any Bloomington Urological office for
a 12-month period. Section I.A. of the employment agreement de-
fined "the '[b]usiness'" as "the provision of medical services."
Scaglia subsequently resigned from Bloomington Urologi-
cal, and in August 1996, Bloomington Urological filed a complaint
for declaratory judgment and motions for injunctive relief and a
temporary restraining order (TRO) arising from Bloomington Uro-
logical's claim that Scaglia was violating the covenant not to
compete. The trial court entered a TRO, and in August 1996, the
court denied Scaglia's motion to dissolve it. On September 6,
1996 (prior to the hearing on Bloomington Urological's request
for injunctive relief), the parties reached an agreement, and the
court entered an agreed order. The agreed order provided, in
relevant part, that Scaglia "shall not be involved in the busi-
ness of providing urological medicine services within a 50-mile
radius of Bloomington, Illinois, from this date until June 30,
1997." The agreed order also dismissed the underlying complaint
without prejudice to the right of either party to pursue a cause
of action arising from breach of the employment contract or vio-
lation of the agreed order.
In October 1996, Bloomington Urological filed a motion
for an order to show cause why Scaglia should not be found in
violation of the agreed order, together with a motion that the
trial court reinstate the underlying cause dismissed pursuant to
the agreed order. At the October and December 1996 hearings on
the motion, the evidence showed the following. Scaglia testified
that his medical office is located in a time-share office in
Ottawa, Illinois, and is staffed Monday and Tuesday mornings, and
all day on Thursday. On Wednesdays and Fridays, at least one
nurse works out of Scaglia's home in Bloomington, Illinois.
While working at his home, Scaglia's nurses (1) organize and
prepare patients' charts, (2) check on patients' status and labo-
ratory work, (3) "check on scheduling of patients for surgical
procedures," (4) perform other clerical work, such as typing let-
ters, and (5) sometimes call in prescriptions after consulting
with him.
Scaglia's home office has two telephone lines and a fax
line listed under "Bennett Scaglia, M.D.," and calls to the Otta-
wa office are automatically forwarded to his home office when the
Ottawa office is not staffed. Most of his medical practice-re-
lated mail comes to his home office. Scaglia stated that he is
rarely at his home office. He occasionally receives phone calls
at home from existing patients who have treatment-related ques-
tions, and he sometimes calls in prescriptions from his home.
Scaglia further stated that he does not have an examination room
in his home office, and he has never seen a patient at his home
for "hands-on medical care" or any other kind of meeting.
Scaglia's wife, Rose, testified that Scaglia maintained
an office in their home "as a central answering service." She
also stated that various patient records were transmitted over
the home fax line, and the billing for Scaglia's practice is
handled from the home office.
Scaglia's nurses testified that while working at his
home office, they scheduled surgery and outpatient procedures,
handled billing, and talked with current patients about their
medications.
At the conclusion of the hearing, the trial court found
that Scaglia violated paragraph 1 of the agreed order that pro-
vided that he "shall not be involved in the business of providing
urological medicine services within a 50-mile radius of
Bloomington, Illinois, from this date until June 30, 1997." The
court subsequently entered a written order finding Scaglia in
indirect civil contempt of court for violating paragraph 1 of the
agreed order.
II. ANALYSIS
Initially, we address this court's entry of a rule to
show cause why the appeal should not be dismissed for lack of an
appealable order. In his response to the rule to show cause,
Scaglia contends that this court has jurisdiction to consider the
trial court's order under Supreme Court Rule 307(a)(1), which
permits interlocutory appeal from injunctive orders. 166 Ill. 2d
R. 307(a)(1). We agree.
In determining whether a trial court's order is appeal-
able under Rule 307, this court must look to the substance, not
the form, of the court's order. Bohn Aluminum & Brass Co. v.
Barker, 55 Ill. 2d 177, 180, 303 N.E.2d 1, 3 (1973); In re Estate
of Ohlman, 259 Ill. App. 3d 120, 130, 630 N.E.2d 1133, 1141
(1994). An order constitutes an appealable injunction if it
requires a person "'to do a particular thing, or to refrain from
doing a particular thing, according to the exigency of the writ,
the most common sort of which operate as a restraint upon the
party in the exercise of his real or supposed rights.'" In re A
Minor, 127 Ill. 2d 247, 261, 537 N.E.2d 292, 298 (1989), quoting
Wangelin v. Goe, 50 Ill. 459, 463 (1869). Further, in In re A
Minor (127 Ill. 2d at 261, 537 N.E.2d at 297) the supreme court
wrote that there exists "a policy of broadly construing the mean-
ing of the term 'injunction.'"
After conducting hearings on the rule to show cause,
the trial court found Scaglia in indirect civil contempt for vio-
lating the agreed order, ordered that he not be involved in the
business of providing urological medicine within the restricted
area through June 30, 1997, and ordered that he desist from cer-
tain conduct within the restricted area through June 30, 1997--
namely, that he (1) "shall keep no files relating to patients
within 50 miles of Bloomington, Illinois," (2) "shall have no in
person or telephone contact with any patient if Dr. Scaglia is
physically within 50 miles of Bloomington, Illinois," (3) "shall
maintain no medical practice and shall employ no staff within 50
miles of Bloomington, Illinois," and (4) "shall not have an of-
fice in Bloomington, Illinois[,] and shall have no office tele-
phone, fax or address within 50 miles of Bloomington, Illinois."
The court's order here required Scaglia to refrain from doing
several "particular" things, and it operated as a restraint on
his right to provide uroligical medical services to his existing
patients. Thus, we conclude that the court's order is appealable
under Rule 307(a)(1). We further conclude that Bloomington
Urological's filing (after Scaglia filed his notice of appeal) of
a postjudgment motion seeking modification of the court's order
did not render the court's order nonappealable until such time as
the motion was resolved. In Trophytime, Inc. v. Graham, 73 Ill.
App. 3d 335, 335-36, 391 N.E.2d 1074, 1074-75 (1979), this court
held that no motion attacking an interlocutory order appealable
under Rule 307 serves to extend the time for taking an appeal.
Although the situation here is somewhat different from that in
Trophytime (where the party who filed the postjudgment motion
also filed the notice of appeal), we nonetheless hold that
Bloomington Urological's filing of a postjudgment motion does not
serve to postpone Scaglia's time for taking an appeal.
A. The Trial Court's Finding of Contempt
Scaglia argues that the trial court erred by finding
him in indirect civil contempt because the agreed order upon
which the contempt finding was based was ambiguous and did not
clearly set forth what acts were prohibited. In response,
Bloomington Urological argues that paragraph 1 of the agreed
order is unambiguous and prohibits Scaglia from being "involved
in the business of providing urological medicine services," as
opposed to being involved in the "'practice' of urologic medi-
cine." We agree with Scaglia that the language of paragraph 1 of
the agreed order is ambiguous in its scope.
An agreed order is considered a contract between the
parties to the litigation. Thus, its construction is governed by
principles of contract law. Elliot v. LRSL Enterprises, Inc.,
226 Ill. App. 3d 724, 728-29, 589 N.E.2d 1074, 1077 (1992). As
with any other contract, "[w]hether a restrictive covenant is am-
biguous is a question of law." Fick v. Weedon, 244 Ill. App. 3d
413, 416, 613 N.E.2d 362, 364 (1993). Thus, we interpret the
agreed order at issue here de novo. See Stojkovich v. Monadnock
Building, 281 Ill. App. 3d 733, 742, 666 N.E.2d 704, 711 (1996)
(when an issue is decided as a matter of law, review of a trial
court's decision on the matter is generally de novo).
The primary consideration in interpreting an agreed
order is to effectuate the parties' intent. Elliot, 226 Ill.
App. 3d at 729, 589 N.E.2d at 1077. In Martindell v. Lake Shore
National Bank, 15 Ill. 2d 272, 283, 154 N.E.2d 683, 689 (1958),
the supreme court wrote as follows:
"In general, the intention of the parties is
to be determined from the final agreement
executed by them, rather than from prelimi-
nary negotiations and agreements, [citation]
but previous agreements, negotiations and
circumstances may be considered in determin-
ing the meaning of specific words and claus-
es."
Accordingly, an agreed order must be interpreted in its entirety,
considering all facts and circumstances surrounding its execu-
tion, as well as pleadings and motions from which it emanates.
Elliot, 226 Ill. App. 3d at 729, 589 N.E.2d at 1077. Further,
where--as here--an agreed order emanates from a restrictive cove-
nant, the court must strictly construe it and resolve any doubts
or ambiguities in favor of natural rights and against restric-
tion. Lempka v. Finkel, 278 Ill. App. 3d 417, 427-28, 663 N.E.2d 158, 166 (1996).
Here, section 5.2(d) of the employment agreement pro-
vided that upon termination of his employment, Scaglia would not
"engage in the [b]usiness" from any office located within a 50-
mile radius of any Bloomington Urological office for a 12-month
period. Section I.A. of the employment agreement defined "the
'[b]usiness'" as "the provision of medical services." Thus, the
employment agreement--from which the agreed order flowed--provid-
ed that Scaglia would not engage in the provision of medical
services. Count II of Bloomington Urological's complaint (breach
of contract) alleged that Scaglia was "engaged in the business
within a 50-mile radius" of a Bloomington Urological office. At
the hearing on Bloomington Urological's motion for a TRO,
Scaglia's attorney referred to Scaglia's being "enjoined from
practicing medicine." In addition, at the October 1996 hearing,
Bloomington Urological discussed what "the parties thought it
meant not to be in the business of providing urological medicine"
and suggested that it involved "treating" patients. Further, the
language of paragraph 1 of the agreed order is clearly capable of
being understood in more than one sense.
Thus, strictly construing the agreed order, resolving
any ambiguities against restriction, and considering the circum-
stances surrounding its execution--as well as the employment
agreement and complaint from which it emanated--we conclude that
paragraph 1 of the agreed order prohibited Scaglia from being
involved in the practice of medicine.
We agree with Scaglia that the practice of medicine
does not include administrative or managerial aspects of a medi-
cal practice, such as billing, scheduling, and updating patients'
charts. See 225 ILCS 60/49 (West 1994) (statute relating to the
unauthorized practice of medicine describes the "practice of
medicine" as the diagnosis and treatment of ailments or condi-
tions); see also Women's Medical Center v. Finley, 192 N.J. Su-
per. 44, 57, 469 A.2d 65, 73 (1983) (business, administrative,
and management tasks--whether performed in-house or outsourced--
have "no fundamental impact on the 'modality' of delivery of
health care services"); Practice Management Associates, Inc. v.
Orman, 614 So. 2d 1135, 1138 (Fla. Dist. App. 1993) (under Illi-
nois law, a physician may split fees with a nonprofessional who
provides marketing services).
Further, although we do not decide precisely what "the
practice of medicine" means in the context of a restrictive cove-
nant, we conclude that, in this context, it cannot include tele-
phone inquiries from existing patients to a physician (or his
employees acting as conduits of information) or responses to
those patients--either in the form of recommending treatment or
prescribing medication. In the age of modern technology--where
telephones and beepers travel with an individual and telephone
calls can be automatically forwarded to another line--it simply
makes no sense to place significance upon where a physician hap-
pens to take phone calls.
In addition, physicians have both a legal and ethical
obligation to attend to their patients' needs. Physicians li-
censed in Illinois are specifically prohibited from abandoning
their patients. See 225 ILCS 60/22(A)(16) (West 1994). Further,
the American Medical Association's Council on Ethical and Judi-
cial Affairs mandates that "once having undertaken a case, the
physician should not neglect the patient." American Medical
Association Code of Medical Ethics: Current Opinions with Anno-
tations, 8.11 (1996). To conclude that telephone inquiries from
existing patients to their physician constitute the practice of
medicine in the context of a restrictive covenant would effec-
tively force a physician to neglect or abandon his patients when-
ever they telephone or page him with medical-related questions,
concerns, or emergencies at a time when he happens to be in the
restricted geographical area.
So construed, we conclude that Scaglia did not violate
the agreed order. That order permitted him to examine, diagnose,
and treat patients in his Ottawa office, and it is undisputed
that he never personally examined a patient in his home office.
Nor did the evidence show that he or his nurses ever solicited
patients from his home office. Scaglia's response--and his nurs-
es' responses--to telephone calls from patients he had already
personally seen and treated in Ottawa is a necessary concomitant
to his treatment of those patients.
Thus, under the circumstances of this case, the trial
court erred by finding Scaglia in indirect civil contempt. See
In re Marriage of Herkert, 245 Ill. App. 3d 1068, 1073, 615 N.E.2d 833, 836-37 (1993) (a trial court's finding of contempt
will not be reversed unless it is against the manifest weight of
the evidence).
Because we so conclude, we need not address Scaglia's
argument that the trial court erred by altering the terms of the
agreed order.
III. CONCLUSION
For the reasons stated, we reverse the trial court's
judgment.
Reversed.
COOK, J., concurs.
McCULLOUGH, J., dissents.
 McCULLOUGH, J., dissenting,
Because I disagree with the majority's conclusion that
the agreed order is ambiguous in the scope of the acts prohibit-
ed, I respectfully dissent.
Illinois public policy strongly favors freedom of con-
tract, and courts will not declare a contract violative of public
policy unless it expressly contravenes the law or a known public
policy of this state. Schniederjon v. Krupa, 130 Ill. App. 3d
656, 659, 474 N.E.2d 805, 808 (1985). In upholding the validity
of a restriction by contract upon the right to practice medicine,
the supreme court in Canfield v. Spear, 44 Ill. 2d 49, 52, 254 N.E.2d 433, 435 (1969), found that no legitimate public interest
is adversely affected by such contract, inasmuch as the doctor
could practice elsewhere and other doctors would move their prac-
tice to the area to alleviate any shortage. The parties here
were free to draft any provisions they liked for purposes of re-
solving their dispute by means of the agreed order. Had they
wished merely to prohibit Scaglia from the "practice of medi-
cine," a concept the majority itself declines to define, they
might readily have done so. Instead, the agreed order prohibited
Scaglia from being "involved in the business of providing urolog-
ical medicine services," a limitation necessarily broader than
the "practice of medicine."
The trial court found the following violations proved
beyond a reasonable doubt:
(1) "[Scaglia] is listed in the phone
book, the Bloomington phone book, as Urologic
Surgery Associates."
(2) Scaglia is also personally separate-
ly listed in the same book as "Dr. Bennett
Scaglia."
(3) He employs two registered nurses who
work out of his home.
(4) Scaglia's wife, when she changed ad-
dress with the Bloomington Post Office "indi-
cated it was a business, Urologic Surgery
Associates, moved from 1505 Eastland Drive,
Bloomington, to 3206 Viney Lane,
Bloomington."
(5) Scheduling of work was performed at
the office. Nurse Nydegger indicated she did
reception work for Scaglia 50% in Bloomington
and 50% in Ottawa.
(6) Patient files are kept in
Bloomington. Prescription forms are mailed
from the Bloomington office.
Provisions of the Medical Practice Act of 1987 relating
to the unauthorized practice of medicine describe the practice of
medicine as the "diagnosis or treatment of physical or mental
ailments" (225 ILCS 60/49(i) (West 1994)), and also include con-
duct of a person who "attaches the title Doctor, Physician, Sur-
geon, [or] M.D. *** to his or her name indicating that he or she
is engaged in the treatment of human ailments or conditions as a
business." 225 ILCS 60/49(v) (West 1994). The trial judge could
reasonably find that defendant's maintenance of a telephone list-
ing in his professional capacity constituted providing urological
medicine services and, therefore, the provision of medical ser-
vices within the restricted area. Patient charts and files are
necessarily integral to the diagnosis and treatment of patients,
and the maintenance of files in the Bloomington home office could
also reasonably be found to constitute the "business of providing
urological medicine services." Similarly, defendant employs two
nurses in the Bloomington home office who operate under his di-
rection and control and act as a conduit for defendant's pre-
scription of medication and other medical treatment. Defendant
personally provided medical advice and prescribed treatment from
the Bloomington home office in response to patient calls to that
location. Applying the manifest weight standard, it is clear
defendant violated the agreed order.
The parties bargained for the restriction of "being
involved in the business of providing urological medicine servic-
es." That Scaglia would pay that agreement only cursory heed, by
limiting his physical contact with patients to the Ottawa office,
evidences his disdain for the broader reach of the agreement he
voluntarily entered into. The majority's constriction of the
agreed order to the prohibition of face-to-face, physician-pa-
tient contact, is not supported by the language the parties chose
in framing their consensus.
Curiously, the majority does not contend a restriction
on the practice of medicine, a course of conduct it agrees in-
volves the diagnosis and treatment of physical ailment, is
against public policy--but it becomes so when there is a restric-
tion on doctor-patient telephonic contract for that same purpose.
The trial court's finding of contempt for violation of
the agreed order was not against the manifest weight of the evi-
dence. I dissent.