Academic journal article The University of Memphis Law Review

Torts-Trau-Med of America, Inc. V. Allstate Insurance Co.: The Tennessee Supreme Court Recognizes a Cause of Action for the Intentional Interference with Business Relationships

Academic journal article The University of Memphis Law Review

Torts-Trau-Med of America, Inc. V. Allstate Insurance Co.: The Tennessee Supreme Court Recognizes a Cause of Action for the Intentional Interference with Business Relationships

Article excerpt

Trau-Med of America, Inc. (Trau-Med), is a physician practice management company located in Memphis, Tennessee.1 For purposes of this comment, it is important to have a basic understanding of Trau-Med's business operations. The goal of a physician practice management company is to offer medical care to the public, with a primary focus on "uninsured and indigent personal injury victims."2 One source of Trau-Med's business is referrals from personal injury lawyers who are representing uninsured clients that are unable to afford medical services.3 After obtaining a new client, Trau-Med agrees to conduct the administrative duties for the medical doctors who in turn treat the victims.4 Trau-Med is compensated from the proceeds resulting from the settlement or final disposition of the case.5

Trau-Med filed a claim in a Tennessee trial court against Allstate Insurance Company (Allstate) in November of 1998 for the intentional interference with a business relationship.6 The complaint alleged that Allstate "purposefully attacked [Trau-Med's] lawful business by making libelous statements and by creating defamatory documents for the purpose of ruining its reputation in the legal community."7 Also, the complaint submitted that Allstate had instructed the lawyers for its policyholders to file defamatory motions accusing Trau-Med of specific unlawful conduct.8 Further, Trau-Med asserted that Allstate, its agents, and its employees were involved in a conspiracy to "destroy" Trau-Med's business.9 Additionally, the complaint averred that Allstate agents were implying that "all claimants who do receive medical treatment from Trau-Med can expect to be 'embroiled in unnecessary and expensive litigation.'"10 The last of Trau-Med's averments was that "Allstate's actions have received 'wide publication in the legal profession'" thereby '"raising concern with attorneys about the propriety of [Trau-Med's] business.'"11 As a result of Allstate's actions, Trau-Med claimed that the "false and defamatory allegations . . . 'brought about great economic loss, . . . frightened and demoralized its employees and independent contractor physicians and caused irreparable damage to [Trau-Med's] reputation and prospective economic advantage in the community.'"12 Trau-Med sought recovery based on the "tortious interference with a business relationship accompanied by a malicious and intentional motive to destroy and/or damage Trau[]Med's business and to cause it to suffer financial loss."13

In opposition to Trau-Med's intentional interference with a business relationship claim, Allstate filed a motion to dismiss for failure to state a "cause of action upon which relief could be granted."14 The trial court dismissed the intentional interference with a business relationship claim; however, on appeal, the appellate court reversed and found that such a claim did exist.15 An appeal was granted by the Tennessee Supreme Court to determine whether there were sufficient facts on which to base a claim for "tortious interference with a business relationship."16 The Tennessee Supreme Court held, affirmed.17 Tennessee "expressly adopt[s] the tort of intentional interference with business relationships." Trau-Med of Am., Inc. v. Allstate Ins. Co., 71 S.W.3d 691, 701 (Tenn. 2002).

The purpose behind the tort of intentional interference with business relationships is to hold the defendant "responsible for interfering in the noncontractual business relationships of a plaintiff with motives or means contrary to those used to further lawful competitive business practices." In consideration of this goal, the law accepting this tort has not always existed, as it does now, in Tennessee. In fact, "the tort had neither been expressly adopted nor rejected prior to [the 1997] decision in Nelson v. Martin."19

The recognition of the principles of the tort at issue can be traced back to the courts of England.20 In the early 1600's, the English courts held that one may be liable for interference with prospective contracts when he threatened to '"mayhem and vex with suits'" someone who worked for or patronized a particular individual. …

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