Unfair Trade Practice

Vermilion Hosp. v. Patout, No. 05-82 (La. Ct. App. June 8, 2005)

A hospital brought suit against the management company of a psychiatric unit, the owner of the management company, and the hospital that owned the psychiatric unit for unethical conduct and a conspiracy amounting to an unfair trade practice. The plaintiff hospital had attempted to lease the psychiatric unit from the defendant hospital but twice received no response to its proposals. The plaintiff hospital brought suit alleging unfair business practices under the Louisiana Unfair Trade Practice and Consumer Act. The trial court dismissed the claims.

The issue before the Court of Appeals was whether the plaintiff hospital's suit alleged a valid cause of action against the management company, its owner, or the defendant hospital. The court stated that the first prerequisite to a cause of action under the statute was that the plaintiff show it was a consumer or business competitor of the defendant. Applying the rule to the management company and its owner, the plaintiff hospital was neither a consumer nor a competitor of the company and therefore had no cause of action under the statute. In regards to the defendant hospital, the plaintiff could bring suit under the statute because it was a competitor of the defendant, but the court held that the plaintiff's suit did not state a cause of action because it was solely based on a poor business decision by the defendant, which in and of itself cannot create an unfair business practice.