A recent settlement between Mayo Collaborative Services d/b/a Mayo Medical Laboratories (“MML”) and Mayo Clinic (together with MML,  “Mayo”) and a former Mayo executive, Dr. Franklin Cockerill, reveals the potential legal issues that may arise when health care executives seek new employment and the high stakes litigation that may ensue-regardless of which party may or may not be at fault.

As set forth in Mayo’s complaint, Dr. Cockerill was a former senior officer and director of MML and Chair of the Mayo Clinic Department of Laboratory Medicine and Pathology, where he managed several thousand medical professionals handling laboratory testing and intellectual property development for Mayo and MML.  According to Mayo’s complaint, as a result of Dr. Cockerill’s various positions he had first-hand knowledge of confidential strategic, business, marketing, sales, pricing, and data management information from MML and Mayo.  Eventually, Dr. Cockerill retired and obtained employment with a Mayo competitor.

The Mayo complaint further alleges that Dr. Cockerill breached numerous fiduciary and other duties owed to Mayo, misappropriated Mayo’s trade secrets, and breached a confidentiality agreement when Dr. Cockerill: (1) sought and obtained employment with a Mayo competitor while still employed by and acting as a director of MML/Mayo; and (2) allegedly took certain Mayo confidential information with the intent of disclosing it to that same competitor.

Around December 18, 2014, Mayo and Dr. Cockerill settled Mayo’s complaint.  The settlement agreement included an undisclosed amount, as well as Dr. Cockerill’s resignation from the Mayo competitor at issue.

While settled at a preliminary stage, the high profile lawsuit and subsequent settlement between Mayo and a former senior executive shows the many consequences that may result from a senior health care executive seeking employment with other health care companies, or even competitors to a former employer.  This is particularly so in the currently competitive health care environment.  As seen in the Mayo complaint, and others, such transitions could raise numerous legal issues relating to potential contractual or fiduciary obligations and the protection of trade secrets or other proprietary information; all of which should be carefully analyzed, where necessary.