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Supreme Court, Greene County, New York.

PRIME MEDICAL ASSOCIATES, P.C., Plaintiff, v. Ananthakrishnan RAMANI, MD, Columbia Memorial Hospital and Columbia Memorial Physician Hospital Organization, Inc., Defendants.

Decided: August 24, 2004

Garfunkel, Wild & Travis, PC, Great Neck, Attorneys for Defendants Columbia. Dennis H. McCoobery, Esq. (of counsel), Connor, Curran & Schram, PC, Hudson, Paul M. Freeman, Esq. (of counsel), Hacker & Murphy, LLP, Thomas D. Buchanan, Esq. (of counsel), Latham, Attorneys for Plaintiff.

Defendants Columbia Memorial Hospital and Columbia Memorial Physician Hospital Organization, Inc. (Columbia) move for summary judgment dismissing the third and fourth causes of action contained in the complaint.   Plaintiff cross-moves for summary judgment as to liability and damages against both defendant Ananthakrishnan Ramani (Ramani) and Columbia.   Ramani cross-moves for summary judgment dismissing the complaint.

On September 12, 1996, plaintiff Prime Medical Associates Inc. (Prime) contracted to employ Ramani as an infectious disease medical specialist to provide patient care services, primarily at Prime's medical treatment centers located in Columbia County and Greene County.   The employment contract contained a non-compete clause forbidding Ramani from providing physician services in competition with Prime within a radius of 25 miles of any Prime office for a period of two years after termination or expiration of his employment with Prime.   The employment contract was conditioned upon Ramani obtaining a work visa from the federal government.

The Columbia-Greene area had been designated a Medically Underserved Area (MUA) by the United States Department of Agriculture (USDA) and a Health Professional Shortage Area (HPSA) by the United States Department of Health and Human Services.   Because of these federal designations, Ramani, a citizen of India, was entitled to participate in a program administered by the USDA which waived certain work visa requirements.

Ramani applied to the USDA for the appropriate visa and submitted the employment contract for review and approval.   On July 23rd 1997, the USDA advised Ramani and Prime that the non-compete clause forbidding Ramani from practicing medicine in the subject area, except as Prime's employee, “[d]efeats the purpose of the waiver program.”   The USDA directed the parties to delete the non-compete clause.

Because of the USDA directive, Prime and Ramani amended the employment contract, on July 29, 1997, by deleting the non-compete clause.   The amendment deleting the non-compete clause was submitted to the USDA.

On August 1, 1997, Prime required Ramani to sign a promissory note implementing the terms of the deleted non-compete clause.   The promissory note was not disclosed to the USDA.

Based upon the deletion of the non-compete clause, the USDA issued the work visa and Ramani began performing services for Prime on October 1, 1997.

In July 1998, Ramani was required to sign yet another amendment to the employment contract, again requiring Ramani's compliance with the deleted non-compete clause.   The amended employment contract was not disclosed to the USDA.

In April 2000, Ramani approached Jay Cahalan, the Chief Operating Officer at Columbia, and advised him that he was having significant problems with his employment at Prime and “had decided that he was terminating his employment contract” with Prime.   Ramani told Cahalan that he was planning to move to the Albany area for employment although he would prefer to remain in the Columbia-Greene area if Columbia was interested in employing him.   Negotiations between Ramani and Columbia ensued and resulted in an employment contract on April 24, 2000.   Ramani resigned from Prime on May 1, 2000 and this litigation shortly followed.

 An agreement not to compete with an employer “will be enforced if it is reasonable as to time and area, necessary to protect the employer's legitimate interests, not harmful to the public, and not unduly burdensome” (Albany Medical College v. Lobel, 296 A.D.2d 701, 702, 745 N.Y.S.2d 250;  Scott, Stackrow & Co., C.P.A.'s, P.C. v. Skavina, 9 A.D.3d 805, 780 N.Y.S.2d 675).

 The non-compete clause considered here violates public policy and is unenforceable.   The purpose behind the USDA prohibition against the restrictive covenant was set forth by the United States Information Agency (USIA):

“As the underlying policy objective for an agency to act on behalf of a foreign medical graduate is to provide primary health care to the residents (in areas without adequate access to medical care), the contract shall not include a non-compete clause enforceable against the foreign medical graduate.   This provision is adopted to insure that the foreign medical graduate is not forced to leave a HPSA ․ or MUA at the end of his or her contract.”  (Parenthetical material supplied).

Prohibition of a non-compete clause in foreign medical graduate employment contracts submitted for visa approval, under the circumstances considered here, remains the public policy of the United States (see 22 CFR § 41.63[c][4] [i] ).

Dr. Ramani is the only infectious disease specialist serving the Columbia-Greene area.   The court thus finds that enforcement of the non-compete clause would pose a substantial risk of harm to the public (Lowe v. Reynolds, 75 A.D.2d 967, 428 N.Y.S.2d 358;  cf. Bollengier v. Gulati, 233 A.D.2d 721, 650 N.Y.S.2d 56).

 Finally, the court will not condone the submission of an apparently fraudulent document to the federal government for the purpose of obtaining a visa.   The employment contract was expressly conditioned upon Ramani obtaining a visa.   Both Ramani and Prime were aware that the federal government would not issue the visa unless the non-compete clause was removed.   Ramani and Prime acted in concert to fraudulently obtain the visa and to defeat the very purpose of the visa waiver program.

Under the circumstances of this case, and considering the relative culpabilities of Prime and Ramani in perpetrating a fraud upon the government, neither are entitled to recover damages from the other (see, Smith v. Pope, 72 A.D.2d 913, 422 N.Y.S.2d 192).

The complaint and counterclaims are dismissed.

This constitutes both the decision and the order of the court.



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