Holden v. Rockford Memorial Hospital Supplemental op. on remand

No. 2--96--0784
_________________________________________________________________
IN THE

APPELLATE COURT OF ILLINOIS

SECOND DISTRICT
_________________________________________________________________

JOHN P. HOLDEN, ) Appeal from the Circuit Court
) of Winnebago County.
Plaintiff and )
Counterdefendant-Appellee, )
)
v. ) No. 96--MR--46
)
ROCKFORD MEMORIAL HOSPITAL, )
) Honorable
Defendant and ) Gerald F. Grubb,
Counterplaintiff-Appellant.) Judge, Presiding.
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Supplemental Opinion On Remand

JUSTICE COLWELL delivered the opinion of the court:
On March 27, 1997, this court filed its opinion in the above-
entitled case. In that opinion, we found that the corporate-
practice-of-medicine doctrine prohibited Dr. Holden from having an
employment contract with Rockford Memorial Hospital. Relying on
the Illinois Supreme Court s decision in People v. United Medical
Service, Inc., 362 Ill. 442 (1936), we explained that a
corporation, even a hospital, was not allowed to employ physicians
because such action constituted practicing medicine in violation
of the corporate-practice-of-medicine doctrine. Accordingly, we
affirmed the trial court s order granting summary judgment in favor
of Dr. Holden, finding that any contract he had with the hospital
was void and unenforceable.
The hospital petitioned our supreme court for leave to appeal.
The supreme court denied the hospital leave to appeal but entered
a supervisory order, which stated:
In the exercise of this Court s supervisory authority the
judgment of the Appellate Court, Second District, in case No.
2--96--0794 is VACATED. The Appellate Court, Second District,
is directed to reconsider its judgment in light of Berlin v.
Sarah Bush Lincoln Health Center (October 23, 1997), No.
91059.
In Berlin v. Sarah Bush Lincoln Health Center, No. 91059 (Ill.
October 23, 1997), the supreme court addressed the issue of whether
the corporate-practice-of-medicine doctrine prohibits licensed
hospitals from employing physicians to provide medical services. In
Berlin, a physician filed a complaint for declaratory judgment
seeking to have his employment agreement with a health center
declared unenforceable. The physician stated that the agreement
was void because by employing physicians the health center was
violating the corporate-practice-of-medicine doctrine. The health
center contended that there was no statutory prohibition on the
corporate employment of physicians and that no judicial
determination existed that prohibited hospitals from employing
physicians.
The Berlin court reviewed the history of the corporate-
practice-of-medicine doctrine and the application of the doctrine
in Illinois. Next, the court discussed the applicability of the
doctrine to hospitals in other jurisdictions. The Berlin court
stated that some states have declined to adopt the corporate-
practice-of-medicine doctrine, some have determined that the
doctrine is inapplicable to nonprofit hospitals and health
associations, and some have decided that the doctrine is not
applicable to hospitals that employ physicians because hospitals
are authorized by other laws to provide medical treatment to
patients.
Then, the Berlin court concluded that the latter of the three
approaches was persuasive. The court stated:
We decline to apply the corporate practice of medicine
doctrine to licensed hospitals. The instant cause is
distinguishable from [past Illinois cases]. None of those
cases specifically involved the employment of physicians by a
hospital. More important, none of those cases involved a
corporation licensed to provide health care services to the
general public. Berlin, slip op. at 11.
The Berlin court added that the public policy concerns that
supported the doctrine were inapplicable to a licensed hospital in
the modern health care industry. Consequently, the Berlin court
held that hospitals may enter into contracts with physicians
without violating the corporate-practice-of-medicine doctrine.
Pursuant to the supreme court s supervisory order, we now
readdress the appeal at bar in light of Berlin. Here, Dr. Holden
and the hospital negotiated an employment contract containing a
noncompetition clause. Two years later, Dr. Holden submitted his
resignation. Subsequently, Dr. Holden filed a complaint for
declaratory judgment seeking a declaration that his employment
agreement with the hospital was void and unenforceable as a matter
of law under the corporate-practice-of-medicine doctrine.
Accordingly, the noncompetition clause was invalid.
The issue in this case was squarely before the Berlin court.
Like the physician in Berlin, Dr. Holden had an employment
agreement with a hospital and sought to leave his employment after
having his contract declared unenforceable. As the Berlin court
held, however, the corporate-practice-of-medicine doctrine does not
apply to hospitals. Accordingly, the contract between Dr. Holden
and Rockford Memorial Hospital is not unenforceable or void as a
matter of law.
For the foregoing reasons, the judgment of the circuit court
of Winnebago County is reversed, and this cause is remanded to the
circuit court for further proceedings not inconsistent with this
opinion.
Reversed and remanded.
GEIGER, P.J., and THOMAS, J., concur.