Are Referral Sources Protectable Under Florida Law?

The question of whether referral sources constitute legitimate, protectable business interests under Florida's Covenants Against Unfair Competition statute, Fla. Stat. § 542.335 (2014), is likely heading to the Florida Supreme Court to be decided, following two conflicting decisions by separate appellate courts as 2015 came to a close.

In a decision released December 31, 2015, Florida's Fifth District Court of Appeal ruled that referral sources are not legitimate, protectable business interests in the case of Carla Hiles v. Americare Home Therapy, Inc., Etc., Case No. 5D15-9, overturning the trial court's entry of a temporary injunction in favor of American Home Therapy, Inc., d/b/a Americare Home Health ("Americare"). The decision cited as precedent the 5th District's own identical decision a decade earlier, in Florida Hematology & Oncology v. Tummala, 927 So.2d 135 (Fla. 5th DCA 2006). However, the 5th District's decision in December directly conflicts with a decision rendered a month earlier, on November 18, 2015, by the Florida 4th District Court of Appeal in Infinity Home Care, L.L.C. v. Amedisys Holding, LLC., 40 Fla. L. Weekly D2589b (November 18, 2015). In Infinity Home Care, the 4th DCA held that referral sources may be a legitimate business interested under Fla. Stat. §542.335, and certified conflict with Tummala.

In Americare, the facts were largely not in dispute. Hiles worked as a home health liason for Americare in Volusia County, Florida. In that role, Hiles was responsible for soliciting referrals of patients to Americare from their treating physicians, in order that Americare could provide in-home patient care services for various medical needs, including nursing, physical therapy, occupational therapy, speech therapy, medical social work and home health aids. On November 7, 2011, as part of her acceptance of employment with Americare, Hiles executed and entered into a Non-Compete, Non-Solicitation and Nondisclosure Agreement (the Non-Compete"), which asserted that Americare's business "depends on referral sources," including health facilities and physicians, and described Hiles' role as a "liason" was one forging relationships with such referral sources. The Agreement further asserted that Hiles would be privy to confidential information relating to Americare's business and would develop relationships with existing and potential referral sources. Under the relevant terms of the "Non-Solicitation" provisions of the...