Neonatology Associates, LTD v. Phoenix Perinatal Associates, Inc., 164 P.3d 691

Arizona Supreme Court

2007

Chapter

22

Title

Competitive Torts

Page

865

Topic

Overview:  Competitions As A Tort

Quick Notes

A business competitor does not act improperly if its purpose at least in part is to advance its own economic interests

Book Name

Torts Cases, Problems, And Exercises.  Weaver, Third Edition.  ISBN:  978-1-4224-7220-0.

Issue

o         Whether OMG practice of routinely referring their patients to qualified neonatologists within their own practice whether in network or out of network instead of referring patients to NAL is improper?  No.

Procedure

Trial

o         Granted Motion for Summary Judgment In Favor of Obstetrix.

Supreme

o         Affirm

Facts

Reasoning

Rules

Pl NAL

Df PPA

Background

o         NAL Appeals from summary judgment.

NAL

o         A group of neonalogists.

Obstetrix

o         Obstetrix perinatologists were formerly employed by PPA.

o         Obstetrix neonatologists formerly practiced as NSL, where there was not contract.

Merger (Obstetrix Medical Group)

o         PPA and NSL

o         Managed by Pediatrix Medical Group.

Referrals Before Merger

o         PPA physicians typically referred their NEONATAL patient-members to NAL physicians.

Referrals After Merge

o         No more referrals to NAL.

o         Obstetrix Medical Group now however referred their patients to Obstetrix neonatologists, who have treated the patients without compensation if the patients' plans refused to pay for Obstetrix neonatal services.

NAL sued Obstetrix,

o         Alleging that Obstetrix's practice of referring patients out-of-network to its own neonatologists rather than to NAL physicians constitutes interference with NAL's contractual relationship with the relevant plans and unfair competition.

OMG File Motion for Summary Judgment

o         Obstetrix filed a motion for summary judgment.

Trial Court - Granted

Appeal - NAL files timely appealed.

Tort of Intentional Interference

o         To prove the tort of intentional interference with contractual relations,

o        A plaintiff must show the existence of a valid contractual relationship or business expectancy,

o        the interferer's knowledge of the relationship or expectancy,

o        intentional interference inducing or causing a breach or termination of the relationship or expectancy, and

o        resultant damage to the party whose relationship or expectancy has been disrupted.

o        In addition, the interference must be improper as to motive or means before liability will attach.

NAL Interference Arg

o         Says conduct was improper.

Courts Response

o         Disagrees that there is any genuine issue of material fact.

Interference

o         To be actionable, interference with a contractual relation must be both intentional and improper.

o         If the interferer is to be held liable for committing a wrong, his liability must be based on more than the act of interference alone.

Whether a particular action is improper for purposes of a tortious interference claim is determined by a consideration of seven factors:

a)       the nature of the actor's conduct,

b)      the actor's motive,

c)       the interests of the other with which the actor's conduct interferes,

d)      the interests sought to be advanced by the actor,

e)       the social interests in protecting the freedom of action of the actor and the contractual interests of the other,

f)        the proximity or remoteness of the actor's conduct to the interference and

g)      the relations between the parties.

Intentional vs Improper Distinctions

o         Intentional Element focuses on the actors mental state.

o         Improper Element is determined by weigh the social importance of the interest the Df seeks to advance against the interest invaded.

NAL Improper deviation for the standard industry practice

o         Obstetrix refers both in network and out of network patients to its own practice group instead of referring them to NAL like they did in the past.

o         In addition, Obstetrix absorbs out of network fees for plans that refuse to pay.

o         This is what NAL is pissed about.

Courts Response

o         Nothing on record says this should apply.

NAL Patients are entitled to their bill

o         A physical does not have to treat patients.

o         Patients do not have to use their insurance.

NAL Impropriety:  Obstetrix breached its own contract relationship with plans.

o         Each insurance provider agrees to refer patients EXCLUSIVELY to other in network physicians.

Courts Response

o         NAL does not have a relationship with 2 of the insurance providers.

o         There is no record that says Obstetrix cannot refer perinatal patients to out of network physicals for non-covered treatment.

NAL A question of fact exist as to Obstetrix's motive for referring patients to its own neonatologists

o         Obstetrix's self-referral practice is business-driven and does not involve the exercise of medical judgment."

Rule Question of Fact to a Specific Motive

o         A question of fact as to a specific motive is only material if one of the possible motives supported by the record may be considered improper.

Rule Business-driver Motive

o         A business-driven motive, in and of itself, is not an improper motive.

o         A business competitor does not act improperly if its purpose at least in part is to advance its own economic interests.

Courts Response

o         NAL has neither presented evidence of anything more nefarious [evil] than business competition nor evidence from which a reasonable jury could find that Obstetrix acted improperly.

o         Therefore, summary judgment on NAL's claim for tortious interference with contract was appropriate.

AFFIRMED

Rules

Tort of Intentional Interference

o         To prove the tort of intentional interference with contractual relations,

o        A plaintiff must show the existence of a valid contractual relationship or business expectancy,

o        the interferer's knowledge of the relationship or expectancy,

o        intentional interference inducing or causing a breach or termination of the relationship or expectancy, and

o        resultant damage to the party whose relationship or expectancy has been disrupted.

o        In addition, the interference must be improper as to motive or means before liability will attach.

Interference

o         To be actionable, interference with a contractual relation must be both intentional and improper.

o         If the interferer is to be held liable for committing a wrong, his liability must be based on more than the act of interference alone.

Whether a particular action is improper for purposes of a tortious interference claim is determined by a consideration of seven factors:

a)       the nature of the actor's conduct,

b)      the actor's motive,

c)       the interests of the other with which the actor's conduct interferes,

d)      the interests sought to be advanced by the actor,

e)       the social interests in protecting the freedom of action of the actor and the contractual interests of the other,

f)        the proximity or remoteness of the actor's conduct to the interference and

g)      the relations between the parties.

Rule Question of Fact to a Specific Motive

o         A question of fact as to a specific motive is only material if one of the possible motives supported by the record may be considered improper.

Rule Business-driver Motive

o         A business-driven motive, in and of itself, is not an improper motive.

o         A business competitor does not act improperly if its purpose at least in part is to advance its own economic interests.

Class Notes