A Tennessee judge has tossed out a $25 million punitive damages award against HCA in a trade secrets case involving two information technology consultants, but allowed to stand $1.5 million awarded to the consultants. The consultants accused HCA of defaming them in a countersuit. HCA fired the consultants, Alexander Batsuk and Ryan Howard, in 2002 when the company learned that Batsuk and Howard were circulating plans to investors to start a company that would provide hospitals with labor-management software. HCA believed that they would use trade secrets learned while working on similar software for HCA. The company sought a restraining order and injunction to keep Batsuk and Howard from divulging the trade secrets. The consultants alleged that HCA defamed them to other employees and a vendor. A jury awarded the men both compensatory and punitive damages totaling $26.5 million.
Davidson County Chancery Court Judge Claudia Bonnyman ruled that HCA's comments regarding the two men were not delivered with malicious intent or bad faith, which Tennessee law requires for punitive damages to be awarded. The judge also denied several motions, including HCA's bid for a permanent injunction against the consultants and the consultants' motion accusing HCA of seeking the injunction in bad faith. HCA said it would ask that the compensatory damages be set aside or reduced, and it would seek a new trial if those motions were denied. -- by Vince Galloro