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The Multiple Risks Employers Face When Talking Smack Or Spreading Rumors

A hospital in North Dakota is suing a public affairs firm and two of its lobbyists for defamation and wrongful inference with business relationships after it allegedly falsely blamed the hospital for a Hepatitis C outbreak among 48 residents at a nursing home.

In the suit, the hospital accuses the firm of libel by publishing "deliberate or reckless" false statements designed to hurt the hospital's reputation and make the public think that the hospital was responsible for the outbreak.

The hospital claims the nursing home made "speculative and unsupported accusations that a hospital phlebotomist reused needles when drawing blood from patients, despite the fact that no one ever observed needle reuse during the 10,000 times he drew blood there over a ten-year period. According to the suit, a 2013 investigation into the Hepatitis C outbreak could not determine a single cause and found no evidence that the hospital's phlebotomist caused the outbreak.

Several infected patients and the nursing home sued the hospital following the outbreak. In 2016, in this midst of this legal battle, a new organization began a campaign against the hospital that called for widespread Hepatitis C testing in the community.

The hospital alleges that the defendant created the organization to repeat the nursing home's unfounded accusations against the hospital. At one point, the organization published a video online saying that a hospital employee "reused needles on a regular basis," which caused the disease to spread, even though these statements were false. According to the suit, the new organization stated that it was founded to hide the fact that the public affairs firm and the lobbyists created and ran it.

The suit also accuses the public affairs firm of wrongful interference with its current and future business relationships with patients and others in the community. The hospital alleges that the defendant's false statements hurt its reputation and will cause some patients to avoid business relationships with the hospital, leading to financial loss.

The hospital demands a jury trial and more than $75,000 in damages from the public affairs firm. "Public affairs firm sued for libel by hospital involved in nursing home Hep C outbreak," (Nov. 9, 2017); "Trinity Hospitals, Inc. and Trinity Health, Inc. v. The Markham Group, LLC, Bruce Sinclair, Christopher Todd Coon, and Doe No. 1," (Nov. 3, 2017).


Business defamation occurs when one business makes a false statement that hurts another business’s reputation. The defamatory remarks can be either written (libel) or spoken (slander).

A damaged reputation often means lost profits, and business defamation suits allow organizations to seek redress for lost revenue resulting from false and harmful remarks. An organization may be liable for defamation if it makes a statement to someone other than the plaintiff about the plaintiff that hurts that organization’s reputation or esteem in the community and can be objectively proven as false.

In this case, the hospital sued the public affairs firm because that organization published that the hospital caused the Hepatitis C outbreak— which the earlier investigation showed was not true—and those statements hurt the hospital’s reputation.

In addition, the hospital sued for wrongful interference with business relationships because the public affairs firm’s actions caused the hospital to lose patients. Tortious interference occurs when one organization interferes with the contracts or relationships of another organization with the intent of causing economic harm. An organization can sue another organization for tortious interference with business relationships of the defendant did or said something in order to hurt the plaintiff’s relationships with clients, customers, or other business associates.

Both of these types of lawsuits can carry hefty damages, because the plaintiff is suing for lost profits, which, depending on the extent of the damage, could be substantial, especially if the plaintiff was forced out of business as a result of the defamation or interference.

It is important for organizations to avoid any type of defamatory comments toward another organization, as well as doing or saying anything that could interfere with the business relationships of another organization.

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