WKYT Investigates | Ex-ARC employees decry company’s use, enforcement of noncompetes

LEXINGTON, Ky. (WKYT) - Two central Kentucky women are pushing back against their former employer - one of the state’s largest substance use disorder recovery companies - criticizing Addiction Recovery Care over its use of noncompete restrictions, and asking whether ARC has gone too far with its contract terms and enforcement.

In effect, its noncompetes have become increasingly restrictive as the company continues to expand statewide, leaving ex-employees, they believe, with few other options in the field if they decide to leave ARC.

“They have monopolized the entire state of Kentucky,” said Leanna Murphy.

Earlier this year, Murphy and her friend and co-worker Samantha Carroll received cease-and-desist letters from an ARC attorney, threatening legal action against them for violating the “Non-Competition, Non-Solicitation and Confidentiality Agreement” each signed when they began working for ARC.

Murphy and Carroll currently work for another recovery center.

“We’re being asked to quit our job that we support our families with,” Carroll said. “That’s very scary when we’re in a very scary time.”

Through a spokesperson, ARC declined WKYT’s request for an interview for this story but did provide a statement.

“ARC, like many healthcare companies across the country, utilizes voluntary employment contract clauses to protect proprietary business information in conformance with applicable law,” Jessica Burke, ARC’s chief legal officer, said in the statement. “ARC does not comment on personnel matters pertaining to current or former employees.”

Carroll and Murphy each went through treatment at ARC before being offered jobs there. The two worked for ARC for several years and followed somewhat similar paths, working early on as peer support specialists and later in outreach roles as community liaisons.

Both have also been publicly praised by the company for their efforts as employees.

In 2019, Murphy was awarded for her relentlessness. “I couldn’t imagine a life where I am not in service to those in need,” she told ARC for an employee spotlight posted to social media in April 2021. In March 2022, Carroll was applauded for “changing lives every day” by helping 970 clients enter treatment in a 52-week period.

Murphy left ARC in October 2021, “ready for a change,” she said, and began working at a small treatment center partly owned by her now-husband. Carroll left a year later, she said, also taking a job at the same facility.

Both described their departures as amicable.

“There were no hard feelings. There were actual tears,” Murphy said. “They were happy for me because I was growing, I was getting out of ARC and moving on to other things. So it was very shocking to me when I received the letter.”

The cease-and-desist letter, dated January 27, informs them that they “are now in violation of the [noncompete] Agreement” as a result of their current employment, demands that they “immediately cease and desist from violating the Agreement” and gives them seven days to confirm their compliance in writing.

“In the event you fail to meet this demand,” reads the letter, signed by Johnathan C. Gay, deputy legal counsel, “please be advised that ARC will pursue all available legal remedies, including seeking monetary damages, injunctive relief, and an order that you pay court costs and attorney’s fees.

“Your liability and exposure under such legal action,” the letter states, “could be considerable.”

An estimated 18% of U.S. workers are covered by noncompetes, a 2021 study found. (Disclosure: Many WKYT employees have noncompete clauses in their contracts.)

Noncompetes are designed to keep a company’s employees from working for a competitor in a certain area for a certain amount of time.

Many businesses defend the practice, but it is facing increased scrutiny.

The Federal Trade Commission, which investigates antitrust violations, has proposed a rule to ban them. Additionally, so far this year the FTC has ordered four companies and two individuals to drop their noncompetes, ruling that their restrictions were “unfair methods of competition” in violation of federal law.

Murphy and Carroll told WKYT’s Garrett Wymer that they were aware of the noncompete agreement they had signed, but that it was not properly explained to them. Their understanding was that it applied only to employees wanting to start their own treatment centers, they said.

“If I would’ve known that this would happen to me almost five years later, 100% never would I have signed it,” Murphy said. “If I knew that they could threaten me and try to ruin my life five years later - no; no, sir, I would not.”

The “Non-Competition, Non-Solicitation and Confidentiality Agreement” prohibits employees - for up to two years after leaving ARC - from working for or running a “new Competitive Business...in the Restricted Area,” according to a copy of the agreement reviewed by WKYT Investigates.

While some words appear to be missing from the actual text of the agreement, “Competitive Business” is defined as one “providing opiate addiction treatment programs and services” that was “incorporated or started” any time between the last year before ARC hired the employee in question and two years after they leave.

The contract defines the “Restricted Area” as a geographic area extending 60 air miles in all directions from any ARC treatment center “in existence at the time the employee-employer relationship ends” and any place that the worker “knows or has reason to know” that ARC plans to expand to within 12 months after the employee leaves.

But with the way those terms are written, the noncompete has become much more restrictive as the number of ARC facilities has grown in recent years and expanded well beyond ARC’s initial base of eastern Kentucky.

Addiction Recovery Care describes itself as “the leading provider for addiction treatment in Kentucky.” In 2021, ARC served 7,801 clients in residential care, drove 912,792 miles by transportation and answered 62,856 phone calls, according to a counter on its website.

What began in 2010 with a single residential recovery center in Louisa is now a network of 1,400 beds at more than 30 treatment centers in 22 Kentucky counties. Upcoming facilities are planned for as far east as southwestern Virginia, as far north as central Ohio and as far west as Owensboro, according to ARC’s website.

A 60-air mile radius around each of ARC’s existing or announced facilities covers well over a majority of the commonwealth, including all of northern, eastern and central Kentucky. In south-central Kentucky, the “restricted area” reaches nearly to Glasgow, before it opens up in far western Kentucky (outside a 60-mile radius of Owensboro).

The restricted area also travels well past the commonwealth’s border, reaching into six of Kentucky’s seven neighboring states - beyond Evansville, Ind.; Johnson City, Tenn.; Charleston, W.Va.; or even Dayton, Ohio. (It will extend even farther north with the two upcoming Ohio facilities shown on ARC maps.)

“One of ARC’s slogans is that they bring someone from ‘crisis to career,’” Murphy said. “They brought me from crisis to a career. But when I tried to get a career outside of their company, they’re not willing to stand on that slogan.”

The two former employees identified several things they do not like about the situation, saying not only do they feel “sickened” by the legal threats against them, but they also have questions about whether they had the maturity or comprehension so early in their recovery to sign such a binding legal agreement like they did.

At that time, they said, they believed they had few other options for jobs anyway, echoing what Carroll, as an ARC employee, told WKYT in 2021 for a story about the importance of second-chance employment.

They also wonder how their current company can truly be seen as a competitor to a company as large as ARC.

“There’s no competition,” Murphy said. “Where we’re working now is a very small, intimate, 60-bed facility.”

Despite being given seven days to “confirm compliance” with the cease-and-desist, Murphy and Carroll said they decided not to quit their current jobs. So far, they said, ARC has not taken any further legal action against them for violating the cease-and-desist.

Murphy and Carroll, on the other hand, have since obtained an attorney and are now in the process of countersuing ARC for unrelated labor issues, Murphy said.

The two said they realize they owe a lot to ARC, having experienced firsthand the good its people and programs can do.

“To this day I will tell people how special Karen’s Place is to me,” Murphy said. “On that hill in 2018 changed my life.”

But the bottom line, they say: “We feel like, when did recovery as a whole become a competition? When did it say, ‘You have to choose between helping people, or if you’re not helping people under this non-compete or for this company, you can’t help people’?” Carroll said. “How is that fair to the people that we helped, the people that we could help in the future and this field as a whole?”

Copyright 2023 WKYT. All rights reserved.