Healthcare firm sues ex-employee over defection

Company claims that former finance director was privy to confidential info and so should not be permitted to work for Va.-based competitor

Email | Print By Walker Duncan

What exactly constitutes a key employee's duty of loyalty, under the law? That's the question at the center of a legal action now playing out at Davidson County Chancery Court.

CHD Meridian Healthcare, an administrator of on-site health centers for corporate clients, is suing a competitor in a tug-of-war over the services of its former director of finance, Stephen Hinson of Nashville. CHD Meridian, based in Chadds Ford, Pa. with a local office in Burton Hills, claims Hinson's move in early August to rival Comprehensive Health Services Inc., based in Vienna, Va., is a breach of contract.

Following Hinson's resignation in early August, CHD Meridian sent a letter to Hinson and his attorney ordering him to cease his employment with Comprehensive. In a response, included in court filings for the lawsuit (a copy of which is available at this link), Hinson's attorney claims that in addition to his not having signed a non-competition agreement, his role at Comprehensive is not identical and the two companies are not even direct competitors in all aspects of their business.

According to CHD Meridian, however, the two companies are competitors, and by performing his duties at Comprehensive, Hinson will be in violation of the access and confidentiality agreement he signed when he began work for CHD. The former employer contends that because of his knowledge of their confidential financial information, Hinson will provide Comprehesive with an unfair advantage when bidding on contracts.

Cited in an affadavit from David R. Bock, CHD Merdian's CFO, is a previous instance where CHD claims that Comprehesive "hired a key employee from a competitor in the industry which directly led to a client's decision to replace the competitor and instead enter into a multi-million dollar contract with Comprehsive." The specifics of this accusation were not included in the affadavit.

But according to Hinson, he will not be serving in an identical capacity at Comprehensive and his knowledge of CHD Meridian's business does not qualify as a trade secret. His pleadings also allege that CHD's attempt to convince him to sign a non-competition agreement following his resignation is evidence of the fact that, without signing such an agreement, he and CHD Meridian both know he is legally free to work for Comprehensive if he so chooses.

This has not stopped CHD Meridian from trying to keep him from doing so. In their prayer for relief the company asks that Hinson be prevented from working for Comprehensive for a period of 18 months. In addition they ask the court to prevent Comprehensive from bidding on any contracts in their "mature pipeline."

Chancellor Claudia Bonnyman, who is hearing the case, denied an initial restraining order that would have prevented the employment relationship between Hinson and Comprehensive. Instead, she held a temporary injunction hearing on September 5 during which she said that Hinson could not use any documents pertaining to CHD Meridian's business that he may have in his possession to aid Comprehensive in any way. He was not, however, prevented from continuing his employment with Comprehensive.

Representing CHD Meridian are Bob Boston of Waller Landsen, Joseph Centeno of Obermayer, Rebmann, Maxwell, & Hippell, in Philadelphia, and Carlos Recio of Davis & Campbell, in Washingon D.C. Representing Mr. Hinson and Comprehensive are Salvador M. Hernandez and John R. Jacobson, both of Bowen, Riley, Warnock, & Jacobson. None of the attorneys could be reached for comment.