Two competing specialty clinics in Des Moines, Iowa, have come to an agreement after some former veterinarians and staff of one clinic left to form their own practice, thus, violating their contracts with the original clinic.
Iowa State University, which owns Iowa Veterinary Specialties, filed a lawsuit in February accusing five employees of taking confidential customer and financial information, using hospital resources to launch the Iowa Veterinary Referral Center, and deleting important files before leaving (see JAVMA, July 1, 2011). The lawsuit also claimed Drs. S. Brent Reimer and Derek D. Nestor violated the noncompetition clauses in their employment contracts that bar them from working in veterinary medicine in central Iowa for two years if they were to leave the practice's employment.
The doctors filed a countersuit against Iowa State, arguing the College of Veterinary Medicine was seeking a monopoly over pet care in the region and illegally interfering with private enterprise.
U.S. Federal District Judge John Jarvey issued a preliminary ruling on April 27 that upheld the noncompetition agreements. Following the court ruling, the two sides entered mediation.
Iowa State and the Iowa Veterinary Referral Center agreed to a settlement in late May to dismiss the federal lawsuits they filed against each other. The stipulations require that the veterinarians pay $100,000 to Iowa Veterinary Specialties by June 30 and that their new firm give the hospital 5 percent of its gross revenue each month for the next two years. The settlement enforces Dr. Reimer's noncompetition clause, which lasts until Feb. 1, 2013, but allows other employees who had noncompetition agreements to work there under certain stipulations.
The firm agreed not to advertise on TV or radio or in the yellow pages, not to expand the services it currently offers, and not to hire away any more employees from the ISU-run hospital. Its employees were also required to immediately return all ISU documents they had.
"ISU and ISU-VSC regard the settlement to be in the best interest of all involved," an ISU spokeswoman said in a June 22 statement.