By John Pacenti, Daily Business Review | Tel: (305) 347-6638.
September 2, 2014 – Boca Raton-based MDVIP Inc. is to concierge medicine as Hollywood is to movies.
It is very much the alpha dog in the growing health care niche, which once was the bastion of the rich but is now an available option to many workers through their employer’s insurance plans.
For an upfront annual fee, patients are given specialized attention by physicians with limited patient loads. Services can include house calls, longer appointments and greater access. Some high-end concierge doctors are available 24 hours, seven days a week and will even travel to a vacation location if a patient is ill.
But MDVIP’s competitors say there’s a reason why it dominates the industry, accusing it of creating a monopoly in many regions. An antitrust lawsuit filed against the company claims it has used courts and noncompete agreements with its doctors to bully its way to the top.
Signature MD Inc., a competitor based in Marina Del Rey, Calif., filed an antitrust lawsuit in July against MDVIP in Los Angeles. The lawsuit assigned to U.S. District Judge Dolly M. Gee alleges the company hobbles doctors by making them sign a two-year noncompete agreement.
MDVIP often files lawsuits to enforce the agreements in Palm Beach County, even against nonphysician employees who switch to competitors. The company in January 2013 sued Signature MD and some of its employees asserting theft of trade secrets.
Signature MD described the lawsuit as a “sham” in the antitrust lawsuit.
“MDVIP has no legitimate business justification for the restrictive covenant and uses it simply to hinder its competitors from hiring individuals who are experienced in the concierge medicine industry,” according to the lawsuit filed by Duane Morris attorneys Wayne A. Mack in Philadelphia and Cyndie M. Chang in Los Angeles. “Following the expiration of the restrictive covenant, MDVIP continues this anti-competitive conduct by filing lawsuits against its former patient advocates who work for competitors.”
MDVIP has filed a lawsuit in Palm Beach Circuit Court against three former employees, none of whom are doctors. The defendants are a former senior marketing analysts and two former patient advocates who now work for Signature MD. They are accused by MDVIP of improperly obtaining access to the company’s confidential and trade secret information.
Signature MD and two employees in the Palm Beach lawsuit are being defended by Gail McQuilkin, managing partner of Kozyak Tropin & Throckmorton in Coral Gables. She referred questions for comment to Signature MD’s CEO Matthew Jacobson.
Jacobson started Signature MD eight years ago with $300,000, and the company is projecting $27 million in revenue in 2014. He saw an opportunity for concierge medicine with the baby boomer generation getting older and primary care physicians getting squeezed by insurance companies.
“No one was going into primary care because they couldn’t make it any more,” Jacobson said. He estimates Signature MD is 10 percent the size of MDVIP.
He and his attorneys claim MDVIP is using the courts to bully competitors and former employees, and is in effect using the courts to conduct a form of corporate espionage.
“From my observation, the goal of their claims is to bleed us out, to deprive of us of our financial resources and to gather from the questions asked in depositions as much information competitive information and to harass our employees,” Jacobson said.
One lawsuit was filed against a Signature MD employee who worked for about three months in clerical support for MDVIP. The litigation claimed he had stolen trade secrets, Jacobson said.
He said the type of noncompetes MDVIP are forcing employees to sign are akin to what are given to top executives of the company who are duly compensated, not employees who make $40,000 a year.
“I just have never seen anything like this in any other industry,” Jacobson said.
MDVIP’s attorney, Jerome Hoffman of Holland & Knight in Tallahassee, did not return calls for comment by deadline.
MDVIP spokeswoman Nancy Udell said the allegations are completely without merit.
“Signature MD’s antitrust lawsuit against MDVIP in Los Angeles appears primarily to be an attempt to retaliate against the lawsuit MDVIP has brought in Florida against Signature MD for misappropriating MDVIP’s trade secrets,” Udell said in an email.
MDVIP started around 2000 and quickly became an industry leader. Its litigious ways started after it was purchased by Procter & Gamble Co. in 2009 and continued since its sale to equity investor Boston-based Summit Partners LLC in May, Mack said.
MDVIP’s restrictive covenants prohibit physicians from practicing concierge medicine independently or with another concierge medicine membership program within a 10-mile radius of an existing office or within a 10-mile radius of any MDVIP-affiliated physician.
“They have foreclosed us from certain markets by tying up doctors with long-term contracts, which are in essence evergreen contracts,” Mack said. “We have been unable to sign up doctors or offer consumer choices because of these contracts.”
Mack maintains the contracts are unenforceable because doctors are not direct employees of MDVIP. They pay a royalty or franchise fee per patients for services, such as marketing, patient conversion and clerical support.
“If a doctor signs up with MDVIP, that doctor is stuck,” Mack said.
Patients generally pay $1,500 and $2,000 extra a year for concierge care. They still have co-pays where applicable and must maintain primary care insurance, including Medicare.
The antitrust lawsuit is seeking an injunction ordering the company to cease anti-competitive activities plus treble damages under the California Business and Professions Code.
MDVIP filed a motion to disqualify Duane Morris from representing Signature MD, saying the law firm learned confidential and proprietary trade secrets in previous litigation.
The alleged trade secrets relate to “the strategies and methods by which MDVIP identifies, evaluates and recruits physicians to affiliate with its wellness management program, transitions and supports of their practice in the program and the contractive provisions, including restrictive covenants,” the motion reads.
Gee has scheduled a hearing for Oct. 10. Mack calls the disqualification motion meritless.