Boardroom allegiances and a $28 million OB-GYN dispute
A New Jersey lawsuit over a departing OB-GYN group has become a sharp example of how health systems now fight for physician alignment when independent practice has thinned and market power has shifted toward large hospital and corporate employers. St. Peter’s Healthcare System’s October 14 complaint against RWJBarnabas Health and former board member Maureen Cernadas, MD, centers on a single central New Jersey practice, yet the allegations reach far beyond one local group. At stake are questions about fiduciary duty, merger confidentiality, and the legal tools available when whole physician teams move together.
The dispute begins with a simple business reality: obstetrics and gynecology can be financially and strategically decisive. St. Peter’s says patients linked to Brunswick Hills OB-GYN generated about $28 million in net patient revenue in 2025. In May, the practice’s nine physicians left Axia Women’s Health and formed Mid-Jersey OBGYN Partners, a joint venture with RWJBarnabas. Delivery volume, outpatient procedures, referral patterns, and downstream hospital services make that kind of migration more than a staffing inconvenience. It can alter a health system’s maternity footprint almost overnight.
One sentence captures the tension. This is not a garden-variety physician job change.
Fiduciary duty replaces the missing noncompete
St. Peter’s did not employ Cernadas, so it could not rely on a traditional physician noncompete tied to an employment contract. Instead, the system built its case around board service and alleged misuse of inside information. The complaint says Cernadas negotiated with RWJBarnabas for nearly two years while serving on the St. Peter’s board and failed to disclose a conflict. She resigned from the board on April 15. St. Peter’s also alleges that RWJBarnabas used confidential information from failed merger discussions between the two systems. RWJBarnabas denies the claims.
That legal structure matters because the old restraint model is losing force in medicine. As of January 1, 2026, 82% of U.S. physicians were employed by hospitals or corporate entities, and hospitals and corporate entities owned 63.9% of physician practices, according to a Physicians Advocacy Institute and Avalere Health report cited in the case discussion. When physicians are no longer independent practice owners, health systems increasingly turn to fiduciary-duty, unfair competition, civil conspiracy, trade-secret, and nonsolicitation theories to protect referral streams and business relationships. The shift is visible here: St. Peter’s is pursuing claims it can attach to a board member and alleged confidential data use, while Axia Women’s Health, which owned the practice, is pursuing a different set of claims against the physicians and RWJBarnabas.
The Axia case adds another layer. In May counterclaims, the company accused the physicians, RWJBarnabas, and three RWJBarnabas executives of misappropriating trade secrets and soliciting 31 staff members. When a practice departs as a unit, the legal fight often broadens beyond the physicians themselves to schedulers, nurses, managers, and operational staff who keep an office functioning.
Failed mergers create a reservoir of sensitive information
Healthcare merger talks often generate an enormous amount of financial, operational, and strategic information, and that information does not simply vanish when the transaction dies. The FTC sued to block the St. Peter’s-RWJBarnabas merger, and the talks ended in 2022. St. Peter’s says confidentiality obligations tied to those negotiations still bind RWJBarnabas. If a health system later recruits physicians from a rival, prior access to valuation assumptions, service-line economics, and strategic priorities can become central evidence in court.
The same pattern appears in other recent disputes. Ellis Medicine is fighting St. Peter’s Health Partners over 27 cardiologists after nearly six years of merger talks ended in June. South Texas Spinal Clinic says Surgery Partners used financial and physician productivity data from acquisition discussions to recruit its highest-revenue physicians. In all three conflicts, the alleged misuse of merger-era information is not a side issue; it is the theory that connects stalled corporate negotiations to later physician poaching.
Group departures carry more force than isolated defections
The most disruptive feature of these disputes is not a single physician changing employers. It is the movement of an entire clinical cohort. Nine OB-GYNs left together in the Brunswick Hills matter. In the Ellis dispute, 20 of 27 cardiologists resigned, and Ellis says it has signed 22 cardiologists, including two outside recruits, to start on January 1, 2027. In Texas, four physicians left South Texas Spinal Clinic for a Surgery Partners affiliate. These are coordinated exits, and coordinated exits carry different consequences for call coverage, surgical scheduling, patient access, and downstream hospital revenue.
Obstetrics makes the risk especially visible. The March of Dimes counted at least 96 publicly reported labor and delivery unit closures across 35 states from January 2024 to May 2026, with hospitals pointing to staffing shortages, financial pressure, and declining birth volume. When a physician group tied to maternity care shifts allegiance, the concern is not only lost revenue; it is whether a health system can sustain labor and delivery service lines at all. Brunswick Hills plans to move its deliveries to RWJBarnabas after January 2027, a timeline that leaves St. Peter’s exposed to a delayed but significant change in market share and obstetric volume.
The legal outcome will turn on contract language, board governance, confidentiality obligations, and the state’s view of physician mobility. New Jersey still enforces reasonable physician noncompetes under the 2005 state Supreme Court ruling in Community Hospital Group v. More, which weighs whether a restriction harms the public. A bill that would make most physician noncompetes unenforceable in the state, S4068, was reintroduced in January 2025. Yet even as noncompetes face increasing pressure, systems are unlikely to stop protecting their networks. They are simply using different arguments.
George Helmy, RWJBarnabas’s executive vice president and chief corporate affairs officer, said, “These allegations are without merit. We will respond in court, where this matter belongs.” The statement frames the dispute as one for the judiciary, but the underlying fight is already broader than the complaint itself. It is about how far health systems can go to preserve physician alignment when merger talks collapse, data remain in circulation, and entire specialty groups can shift the economics of a hospital service line in a single move.