Background
Joseph Sala, a Connecticut radiologist and former shareholder and employee of Radiology Associates of Hartford, joined a 2022 transaction in which Premier acquired equity interests connected to the practice’s nonclinical assets. Sala received approximately $2.3 million in cash and additional equity, and became a member of RAH Equity Holdings, LLC.
The LLC agreement contained a restrictive-covenant provision barring members from competing in specified radiology locations and within a twenty-five-mile radius of them during membership and for two years afterward. After Sala announced his resignation and planned to work for Radiologic Associates of Middletown, the defendants initiated AAA arbitration seeking a declaration that the restriction was enforceable. The arbitrator ruled that the provision was valid and that Sala’s proposed employment before June 9, 2026, would breach the agreement.
The Court’s Holding
The Connecticut Appellate Court affirmed the trial court’s order vacating the arbitration award. Connecticut’s physician-noncompete statute, General Statutes § 20-14p, embodies an explicit, well-defined, and dominant public policy against unreasonable restrictions on physicians’ ability to practice.
For covenants entered into after 2016, § 20-14p prohibits physician noncompetes lasting more than one year or extending more than fifteen miles from the physician’s primary practice site. The award declared enforceable a 2022 restriction lasting two years and covering at least a twenty-five-mile area. Because enforcing that award would sanction restraints exceeding the statute’s temporal and geographic limits, it violated public policy. Having affirmed on that ground, the court did not address the alternative manifest-disregard basis for vacatur.
Key Takeaways
- Connecticut courts may vacate an arbitration award that clearly violates a dominant public policy.
- Section 20-14p sets enforceability limits for physician noncompetes: no more than one year and no more than fifteen miles from the primary practice site.
- An arbitration award cannot validate a physician restriction that exceeds those statutory limits.
Why It Matters
The decision confirms that arbitral deference does not permit enforcement of a physician noncompete that conflicts with Connecticut’s statutory limits. Parties structuring practice-sale, ownership, or employment agreements involving physicians cannot avoid § 20-14p by placing an overbroad restrictive covenant in an LLC agreement or submitting its enforcement to arbitration.