Important Information Regarding ISU-VSC and IVS
Over recent weeks, ISU-Veterinary Services Corporation (ISU-VSC), a non-profit entity of Iowa State University, and former veterinarians and staff of Iowa Veterinary Specialties (IVS) have been engaged in legal activities regarding the purchase of IVS by ISU-VSC, and the establishment of a competing clinic by the veterinarians.
From the onset of this activity, our interest has solely been to protect our investment and to have people live up to their agreements. Hopefully the information that follows will give you a better understanding of what has been done and why.
The Federal District Court in Des Moines has issued a preliminary injunction against two former IVS veterinarians prohibiting them from competing with ISU-VSC anywhere within Polk County, Dallas County and Warren County. In ruling in favor of ISU-VSC, the Judge found that the two former IVS veterinarians were clearly in breach of their agreements and that public policy favored enforcement of the covenants.
The court order provides a good deal of information regarding this matter and you can view the text at http://www.iasd.uscourts.gov/index.php?option=com_docman&task=doc_download&Itemid=227&gid= 1120
This started when IVS shareholders, all Des Moines area veterinarians, approached the College of Veterinary Medicine in the fall of 2009 with an invitation to make an offer to purchase the emergency and specialty hospital that they created (IVS). Following a lengthy process that included competitive proposals, ISU-VSC purchased IVS from those shareholders for $4.6 million, effective February 1, 2011. (See http://www.news.iastate.edu/news/2011/jan/vethospitalsjoin for more information.) At the time of purchase, there was no other emergency and specialty care hospital serving the Des Moines metropolitan area.
It is common for staff in the medical field to sign agreements not to compete against their employer for a period of time after their employment ends. It is also common for staff to agree not to divulge their employer's proprietary information or to use such information to assist a competing venture.
As soon as ISU-VSC acquired IVS, a number of veterinarians and staff left IVS. Advertisements immediately appeared announcing that on March 1 some of the veterinarians were opening a competing practice, the Iowa Veterinary Referral Center (IVRC). ISU-VSC filed a lawsuit in federal court on February 28 to enforce the terms of covenants not to compete that two of the founders of the new clinic signed when they were IVS employees. The non-competes signed by most of the IVS veterinarians only restricted them from conducting emergency and specialty practice for two years within the three- county Des Moines area, and were assignable by their own terms to a purchaser of IVS.
Part of the appraised value of a going business includes the contractual rights to be received by the purchasing entity. Those rights include covenants not to compete. The suit is intended to protect the investment made by Iowa State through enforcement of laws governing business practices. From the onset of this activity, our interest has solely been to protect the investment in the purchase of IVS, and to have people live up to the agreements they signed during their employment with IVS. There have been news reports indicating that the former IVS veterinarians did not expect ISU-VSC to enforce the non-compete agreements. However, no one from ISU or ISU-VSC ever said these agreements would not be enforced. Had the veterinarians simply asked before opening the competing business, ISU-VSC would have made clear that it would enforce the agreements. Indeed, one veterinarian who did raise the issue with a former IVS shareholder was told that the agreements likely would be enforced by ISU-VSC.
Iowa State's intent for the IVS affiliation from the onset has been to: improve the education of veterinary students by providing access to greater numbers of cases; continue IVS's tradition of responsive, quality care for small animals, their owners, and primary care veterinarians; provide improved services by bringing together the resources two established veterinary medical facilities that will enable delivery of a broader range of specialties in the Des Moines area; and, gain better visibility of trends in animal diseases and client and clinic needs that will help us improve the delivery of animal care.
IVS was established in 1980 by veterinarians with one purpose: To provide the highest quality veterinary emergency and specialty care with a highly qualified team of veterinarians and veterinary technicians present at all times and at all hours.
The Iowa State College of Veterinary Medicine was founded 132 years ago to enhance the health and well-being of animals and humans by providing quality veterinary education and training, and state-of- the-art veterinary diagnostics, treatment and care. The college takes great pride in the accomplishments of its graduates, most of whom are highly successful members of the profession, respected leaders in their communities, and highly skilled practitioners.
At both IVS and ISU, we continue to focus on our missions by providing quality service to our clients, patients and stakeholders. We very much appreciate your patience and understanding, and your use of our services.
Lisa K. Nolan, DVM, PhD
Dr. Stephen G. Juelsgaard
Dean of Veterinary Medicine
Dr. Lee Holmes
Chief Executive Officer
Iowa Veterinary Specialties
Published on October 4, 2016