Berlin v. Sarah Bush Lincoln Health Center
227 Ill. Dec. 769, 688 N.E.2d 106, 179 Ill. 2d 1 (1997)
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Rule of Law:
The common law corporate practice of medicine doctrine, which generally prohibits corporations from employing physicians, does not apply to hospitals duly licensed under state law. Licensed hospitals possess implied legislative authority to employ physicians to provide medical services.
Facts:
- Sara Bush Lincoln Health Center (the Health Center) is a nonprofit corporation licensed to operate a hospital.
- In December 1992, the Health Center and Dr. Richard Berlin, Jr. entered into a five-year employment agreement for Dr. Berlin to practice medicine for the hospital.
- The agreement contained a restrictive covenant prohibiting Dr. Berlin from competing with the hospital within a 50-mile radius for two years after his employment ended.
- The agreement stipulated that Dr. Berlin could terminate his employment by providing 180 days' advance written notice.
- On February 4, 1994, Dr. Berlin notified the Health Center of his resignation, effective February 7, 1994, providing only three days' notice.
- Immediately following his resignation, Dr. Berlin began practicing medicine at a facility for a competing clinic located approximately one mile from the Health Center.
Procedural Posture:
- Sara Bush Lincoln Health Center (the Health Center) sought a preliminary injunction in the circuit court of Coles County to enforce the restrictive covenant against Dr. Berlin.
- The trial court initially granted the injunction in favor of the Health Center.
- On appeal, the intermediate appellate court reversed the injunction on procedural grounds and remanded the case.
- On remand to the circuit court, Dr. Berlin filed a complaint for declaratory judgment and a motion for summary judgment, arguing the employment agreement was unenforceable.
- The Health Center filed a cross-motion for summary judgment to enforce the covenant.
- The circuit court granted summary judgment for Dr. Berlin, holding that the Health Center's employment of a physician violated the corporate practice of medicine doctrine, rendering the agreement unenforceable.
- The Health Center, as appellant, appealed to the Illinois Appellate Court.
- A divided appellate court affirmed the trial court's grant of summary judgment for Dr. Berlin, the appellee.
- The Health Center, as petitioner, was granted leave to appeal to the Supreme Court of Illinois.
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Issue:
Does the common law corporate practice of medicine doctrine prohibit a licensed hospital from entering into an employment agreement with a physician to provide medical services?
Opinions:
Majority - Justice Nickels
No, the common law corporate practice of medicine doctrine does not prohibit a licensed hospital from employing a physician. The doctrine, which was inferred from public policy rather than the express language of the Medical Practice Act, is inapplicable to corporations that have been sanctioned by state law to operate a hospital. Various legislative enactments, such as the Hospital Licensing Act, grant hospitals the authority to provide medical diagnosis and treatment, which reasonably implies the authority to employ physicians to fulfill that function. Furthermore, the public policy concerns underlying the doctrine—such as lay control over professional judgment and the commercialization of medicine—are alleviated in the context of a modern, licensed hospital, which has an independent duty to its patients and is typically governed by a professional medical staff.
Dissenting - Justice Harrison
Yes, the common law corporate practice of medicine doctrine does prohibit a licensed hospital from employing a physician. The court's 60-year-old precedent in People ex rel. Kerner v. United Medical Service, Inc. established that a corporation cannot practice medicine by employing physicians. The legislature is presumed to be aware of this judicial interpretation, and its failure to amend the Medical Practice Act to create an exception for hospitals amounts to acquiescence, making the court's prior construction part of the law. The legislature has created specific statutory exceptions for other entities like HMOs and professional service corporations, but not for hospitals. Under the rule of statutory construction expressio unius est exclusio alterius, the enumeration of specific exceptions implies the exclusion of all others, meaning hospitals remain subject to the doctrine's prohibition.
Analysis:
This decision carves out a significant exception to the long-standing corporate practice of medicine doctrine in Illinois, aligning the law with the reality of the modern healthcare industry. It provides legal certainty for the common practice of hospitals employing physicians, thereby validating countless employment agreements and associated restrictive covenants. By distinguishing licensed hospitals from general corporations, the ruling shifts the legal analysis from a blanket prohibition to a more nuanced approach that recognizes the unique, statutorily defined role of hospitals. This precedent solidifies the employment model for physicians within hospital systems and limits future challenges to such arrangements based on this common law doctrine.
