Will a non-compete clause keep 3 neurosurgeons from opening a surgical center in an Oregon town in which AmSurg owns 3 of the 4 ASCs? The doctors argue in a federal antitrust lawsuit that they should be allowed to open their own ASC in Bent, Ore., despite the non-compete clause they signed after selling 51% of their previous center to AmSurg, one of the nation's leading surgery center management and development companies.

An out-of-court arbitration panel recently sided with AmSurg, hinting that the court may follow suit, according to a report in The Bend Bulletin. But the attorney representing neurosurgeons Kent Yundt, MD, Anthony Hadden, MD, and Philip Wallace, MD, says that they plan to continue fighting AmSurg in the courtroom. "The doctors fully intend to go forward with their case," says Gregory Lynch.

Drs. Yundt and Hadden became part owners in the Bend Surgery Center (BSC) between 2011 and 2012, court records show. In July 2014, AmSurg purchased the center for $22 million and obtained a 51% ownership, with each physician-owner maintaining a 1% interest.

As part of the sale, all of the physician-partners signed a contract where they agreed that they would not own, manage, lease or develop another outpatient surgical facility within a 25-mile radius of the BSC within 5 years or 2 years after their membership ends, whichever is later. But the agreement "carved out" certain in-office procedures the physicians typically performed in their practices, like pain management injections, says Mr. Lynch. The agreement also said that if there were any disputes regarding their contract with AmSurg, the company and doctor must enter arbitration to deal with it.

Just a few months after the sale, Drs. Yundt and Hadden notified AmSurg of their intention to move their physician practice, Northwest Brain and Spine, to a larger office with an adjacent ASC, where they planned to perform these "carve-out" procedures not typically done at BSC, says Mr. Lynch. Dr. Wallace also joined the group after moving from Texas, with plans to perform spine and pain management procedures that did not compete with AmSurg, he says. Northwest Brain and Spine moved to the new facility in April 2015.

One month before the planned move, AmSurg sent the doctors a letter claiming that the ASC would violate their non-compete clause because they planned to charge a facility fee for the procedures. The company then followed up with an arbitration demand. Despite not having signed a contract with AmSurg, court records state that Dr. Wallace also could not perform any procedures, since Drs. Yundt and Hadden's contract stated that any "affiliates" of theirs also could not open a surgery center and collect facility fees.

The doctors soon filed a federal antitrust lawsuit against the company, claiming that since they intended to do procedures not typically performed at BSC, they weren't violating the non-compete clause. They also claimed AmSurg sought to monopolize outpatient services in the town.

The judge stayed the case, pending the arbitration panel's decision. According to The Bend Bulletin, which obtained a confidential copy of the arbitration panel's conclusion, the panel recently decided that AmSurg's non-compete agreement includes any services where facility fees are charged. AmSurg's attorney told the paper that the company believes the arbitration panel's decision resolves any "outstanding issues" and that the court will follow the panel's conclusion and side with the company.

Mr. Lynch disagrees, noting that arbitration panel didn't decide whether the doctors performing these in-office procedures caused any harm to AmSurg, a central point in the case. "They never intended to be competitive at all, in any way," he says. He says he plans to move the court to remove the stay and proceed with the federal lawsuit.

Representatives for AmSurg did not immediately return requests for comment.

Kendal Gapinski