PhyCor moves to uncover physicians' online identities
Seeking to prove libel or potential insider trading, PhyCor has subpoenaed Internet service providers to identify anonymous authors of negative postings.
By Cathy Tokarski, AMNews staff. May 24/31, 1999.
Norman Friedman, MD, never suspected that posting anonymous messages on an Internet chat board about problems with PhyCor's management of his clinic would get him into legal trouble.
But that's exactly what's happened to the Florida dermatologist and as many as 49 other "John Doe" defendants named in a libel complaint filed late last year by the financially troubled Nashville, Tenn., physician practice management company.
The case is gradually coming to light as physicians and other posters on the Yahoo! message board have received notification from their Internet service providers informing them that their identities have been revealed in response to subpoenas issued as a part of PhyCor's complaint. Although such tactics are being used more frequently throughout corporate America, they appear to be rare in health care.
PhyCor's allegation of libel -- especially from a company whose success depends on its reputation among physicians -- has sparked reactions ranging from defiance to skepticism.
"My momma taught me to stand up to bullies," Dr. Friedman said May 7. "Everything I have said concerning PhyCor is, to the best of my knowledge, true. I will swear to that on a Bible."
Another physician whose Internet provider has been subpoenaed but who requested anonymity said PhyCor's threat of legal action may have already achieved what he suspects is the company's goal.
"I think it's harassment more than anything, but it will shut people up," predicted the physician, who also practiced at a clinic managed by PhyCor. "It did me."
Libel a tough claim to prove
Whether PhyCor sought the posters' identities because it believes they have unfairly defamed the company or for other reasons is open to conjecture. Neither PhyCor nor its legal counsel, Nashville-based Waller Lansden Dortch & Davis, would comment on the case.
Regardless, attorneys who specialize in First Amendment law said the use of John Doe libel lawsuits is on the rise, especially as the use of anonymous posts on electronic message boards to discuss companies' performance increases. As of May 11, for example, the Yahoo! message board linked to its PhyCor stock page contained nearly 11,000 messages.
"I think people who are miffed about what's being said [about them] online are better advised not to bring libel suits," said William Turner, an attorney with Rogers, Joseph, O'Donnell and Quinn in San Francisco. "One of the real benefits of Internet communication is the potential for anonymity. I would hate to have that ruined by fishing expeditions."
To prevail in a libel action, a publicly traded company like PhyCor would have to prove that individuals who posted negative comments on a message board knew those comments were false at the time and that those comments directly caused the stock to plunge. Since late 1997, PhyCor's stock has declined from the low 30s to about 5 by mid-May in an industry sector that has lost billions of dollars in market capitalization and the support of much of the physician and investor communities.
"The question is whether [PhyCor] can establish a cause-and-effect relationship," said Thomas Smedinghoff, an attorney who specializes in electronic commerce for McBride, Baker and Coles, Chicago. "My guess is that it will be a tough thing to prove."
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Despite the anonymity that electronic chat boards offer and the disclaimer on the Yahoo! board stating that messages are opinion, not fact, certain individuals could be vulnerable to legal action, Smedinghoff said.
"If [posters] are disclosing confidential information they have an obligation not to disclose, such as trade secrets, because of their position or their fiduciary relationship ... that could give rise to a cause of action other than libel."
Rumors, opinions, insight
Of course, it's impossible to draw that conclusion from scanning the thousands of anonymous posts about PhyCor on the Yahoo! board. The message board is accessible through Yahoo!'s finance page, which carries daily updates on PhyCor's stock performance. PhyCor is traded under the symbol PHYC.
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Class-action lawsuits
Learning the identity of the physician posters on Yahoo! and deciding whether to pursue a libel or another action against them isn't the only legal issue on PhyCor's plate.
The company is also the target of two class-action suits alleging violations of the Securities Exchange Act of 1934. One of the lawsuits, filed October 1998, in U.S. District Court in Nashville (D'Ambrosio v. PhyCor), charges the company with perpetrating "a scheme ... to violate the federal securities laws through the gross overstatement of the assets, earnings and shareholders' equity of PhyCor." It was filed on behalf of shareholders who purchased the company's stock between April 27, 1997, and July 22, 1998. The other class-action case, filed in state court, was scheduled to be heard in Nashville on May 21.
PhyCor is seeking to have the case filed in federal court dismissed, according to plaintiff attorney Douglas Johnston Jr.
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- Jeff |
