SIOUX CITY | Six doctors will for now be prohibited from holding ownership interests, consulting with or working for a new outpatient surgery center being developed in South Sioux City.
District Judge Duane Hoffmeyer has granted Pierce Street Same Day Surgery's request for a temporary injunction against the doctors until a trial can be held to determine if the physicians violated non-compete agreements they had with the surgery center while having some perceived role in the development of Riverview Surgical Center.
Hoffmeyer ruled that Drs. Adam Smith, William Samuelson, Kevin Liudahl, Joseph Morris, Terry Monk and Duane Nelson may not directly or indirectly through Tri-State Specialsts CEO Lee Hilka, invest in or promote the project or make other arrangements for ownership, operations, employment or consultation in it. Hoffmeyer said in his ruling that evidence presented thus far would likely lead a jury to find that the doctors violated their non-compete agreements.
"... it is evident each of the physicians and Mr. Hilka were, and presently still are, though aware of the non-compete provisions under which they obliged, in some manner assisted or otherwise Riverview in the opening of its own ASC (ambulatory surgical center) ...," Hoffmeyer wrote in his 28-page ruling, filed Monday in Woodbury County District Court.
Hoffmeyer denied Pierce Street's request for an injunction against Tri-State Specialists.
"Though an injunction may limit Riverview's marketing efforts and physician investor pool for a period of time, it is unlikely to delay or hinder the completion of the project enough to postpone its spring of 2019 target date," Hoffmeyer wrote.
Tri-State broke ground for the $37 million, 50,000-square-foot facility along the Missouri riverfront in November. Located next to the Delta Hotels by Marriot at 385 E. Fourth St., the center will contain operating rooms, medical offices and patient suites. Patients and families will have the option of staying in the adjacent hotel. The center, expected to open in 2019, will offer many of the same surgical services as Pierce Street.
In December, Pierce Street sued the doctors and Tri-State, saying that the doctors' non-compete provisions in individual operating agreements they signed with Pierce Street prohibit them from being involved with a competing hospital or surgery center within 30 miles of Pierce Street while they hold an interest in Pierce Street and for one year after leaving the company. Located at 2730 Pierce St., across the street from UnityPoint Health -- St. Luke's, Pierce Street is less than four miles from the Riverview site.
Pierce Street claims that the doctors and Tri-State were involved in planning and designing the center as early as 2015, when all six physicians named in the lawsuit had signed operating agreements containing the non-compete provisions in place with Pierce Street. The lawsuit includes claims of breach of contract, intentional interference with a contract, breach of duty of loyalty and conspiracy.
The physicians have denied investing in the Riverview project and have said they do not plan to have ownership, management or employment roles in it. They have argued that their non-compete agreements apply only toward involvement in existing surgery centers, not the creation of a new one.
The doctors, Hilka and Tri-State in January filed a counter lawsuit, claiming that Pierce Street wrongfully terminated operating agreements with the physicians and has interfered with potential business relationships involving the development of Riverview. The counter lawsuit, which also names former Tri-State member Dr. Matthew Steele, contains claims of breach of contract, slander/libel, conspiracy and misappropriation of trade secrets.