Physician noncompetes and payment fights became the year’s defining pressure point
Physician litigation in 2026 kept returning to the same fault lines: restrictive covenants, practice sales, compensation disputes, and the right to move freely between employers. In cardiology, orthopedics, anesthesia, neurosurgery, and ambulatory surgery, the legal system became the arena where ownership, retention, referral flow, and revenue protection collided.
A striking feature of these cases is how often the dispute turned on patient access rather than payroll alone. Hospitals and physician groups framed the lawsuits as necessary to preserve continuity of care and protect investments in specialty service lines. Physician plaintiffs and recruiting systems framed them differently: as restraints that trap clinicians, distort compensation, and interfere with the transfer of patients to the care setting they believe best fits demand.
Cardiology turned into the sharpest test of restrictive covenants
The most consequential battle unfolded in Schenectady, where Ellis Medicine sued St. Peter’s Health Partners Medical Associates over one-year noncompetes affecting 27 cardiologists. Ellis said those restrictions blocked the physicians from joining its system and placed about $75 million in annual procedure revenue at risk. The case moved quickly from abstract contract language to operational consequence: a temporary restraining order was lifted, an appeal followed, and resignations accumulated as the dispute deepened.
The cardiology conflict escalated further when two physicians named in the dispute filed a counterclaim seeking to void the noncompete and non-solicitation clauses. Their filing also brought defamation allegations against two executives. By late October, Ellis said 22 of the 27 cardiologists would join the system Jan. 1. One sentence captures the stakes without embellishment: in high-volume cardiovascular care, the movement of even a handful of specialists can redirect downstream imaging, catheterization, and procedural revenue across an entire region.
Orthopedic and spine ownership fights moved from boardroom to courtroom
In Ohio, Southwoods Health sued two physician owners after a proposed sale of Youngstown Orthopaedic Associates to Cleveland Clinic appeared to conflict with a two-year, 30-mile restrictive covenant. The complaint cited a June email in which the physicians wrote that they might become employees of Cleveland Clinic. A magistrate later approved a temporary restraining order preventing the physicians from taking part in the practice’s letter of intent while they remained Southwoods owners.
The same conflict between ownership rights and employment mobility appeared in Texas, where South Texas Spinal Clinic sued Surgery Partners, Orthopedic & Spine Surgical Hospital of South Texas, and spine surgeon Antonio Webb, MD. The clinic sought more than $5 million and alleged that information from acquisition discussions was used to recruit four physicians from the practice. Private equity-backed and hospital-aligned platforms increasingly compete for orthopedic and spine talent because those services generate reliable procedural volume, ambulatory migration, and ancillary revenue. Litigation is now a common mechanism for contesting who controls that flow.
Compensation disputes increasingly reached federal and state courts
Not every case involved noncompetes. Some centered on money owed, and those disputes were just as combustible. Jefferson Health sued Independence Blue Cross over five payment policies it said cost nearly $100 million in a single year, including $35.4 million tied to a rule that shifted certain procedures from hospital outpatient departments to freestanding ASCs. The insurer rejected the public filing posture, but a federal judge later denied most of the motion to dismiss. When reimbursement rules change the site of service, they do more than alter accounting entries; they can redraw where surgeons, anesthesiologists, and hospitalists are economically viable to practice.
In Missouri, longtime St. Louis Cardinals team physician George Paletta, MD, sued Mercy over $182,500 in unpaid compensation. Mercy said it had provided timely notice and owed nothing. In Tennessee, an arbitrator ordered James Joslyn, MD, to repay $145,110 to his former group while dismissing a roughly $220,000 overpaid-draw claim. The mix of contract language, draw structure, and repayment demands shows how physician compensation fights can metastasize when employment ends and the numbers no longer move in one direction.
Whistleblower and retaliation claims exposed internal control failures
A separate category of litigation focused on patient safety and workplace retaliation. In Oregon, anesthesiologist Rich Clark, MD, won a $1.6 million verdict against Salem Surgery Center after alleging he was fired for reporting how nurses handled anesthesia drugs. The center, which does business as Northbank Surgical Center, is majority owned by SCA Health and affiliated with Optum. The trial placed anesthesia drug handling and retaliation under a legal microscope, and the verdict suggests juries may be receptive when clinicians argue that reporting safety concerns cost them their jobs.
North Carolina produced a different kind of conflict, one that sits at the junction of scope-of-practice rules and physician oversight. Nurse practitioner Jamie Gallagher sued state medical and nursing board leaders over a mandatory collaborative practice agreement, arguing the arrangement is unconstitutional and costs her $16,500 a year in physician collaboration fees. Although no court action had followed by the time of the filing, the case reflects a broader tension between access to care models and the professional boundaries that govern supervision, reimbursement, and responsibility.
Courts continued to shape the limits of physician mobility and liability
Several other rulings rounded out the year’s legal picture. In Texas, a federal judge dismissed the ambulatory surgery center market claims in a proposed class action against U.S. Anesthesia Partners, finding the lead plaintiff lacked standing because he received anesthesia in a hospital rather than an ASC. Claims tied to the hospital market remain active, and trial is scheduled for 2028. In Illinois, a federal judge denied class certification in a no-poach suit involving SCA Health, USPI, and DaVita after excluding the plaintiffs’ wage analysis and finding that individualized issues would overwhelm common ones across more than 6,000 workers.
Age discrimination and retaliation claims also remained live. The 7th Circuit upheld summary judgment against neurosurgeon Robert Richardson, MD, in his age bias case against Northwestern Medicine, finding that COVID-era remarks did not establish age as the cause of his firing. In Oregon, OHSU former cardiovascular leader Sanjiv Kaul, MD, secured an order blocking further cuts to pay, lab funding, and lab space while his retaliation claim moves toward a February 2027 trial. Courts are drawing clearer lines around what counts as protected speech, actionable retaliation, and legally enforceable employment control inside academic medicine.
The legal calendar for 2026 does not point to a single doctrine settling these disputes. It points to fragmentation: cardiologists contesting noncompetes, orthopedic owners disputing sales, surgeons challenging reimbursement policies, and hospitals defending the structure of their compensation systems. Patient care sits in the background of each file, but the actual battleground is control — over physicians, referral streams, revenue, and the terms under which specialists can leave.