Tomlin vs. Tannenbaum: A $25 mil. lawsuit over a business concept

Entrepreneur accuses ex-REN chief of misappropriating idea for medical data system

Nashville entrepreneur Michael Tomlin has filed suit against health care executive Jerome S. Tannenbaum, claiming Dr. Tannenbaum misappropriated a business concept he had developed.

Five years after Mr. Tomlin and Dr. Tannenbaum agreed jointly to explore a technology that would enable the secure flow of medical information between patients and doctors, Mr. Tomlin claims that one of Dr. Tannenbaum's companies has turned the idea into a business with a million customers -- without informing Mr. Tomlin or compensating him.

The lawsuit, filed last Friday in Davidson County Circuit Court, seeks $25 million in damages, plus five million shares of stock.

The legal filing does not specify what company's stock it seeks as damages. It names IMRAC Corp., a medical claims-processing company headquartered in Nashville and controlled by Dr. Tannenbaum, and National Nephrology Associates Inc., an affiliated company, as well as Dr. Tannenbaum individually.

The lawsuit also claims National Nephrology Associates has failed to pay real estate commissions it owed Mr. Tomlin. From April 1999 until August 2000, Mr. Tomlin served as a consultant to the company, helping it develop sites for new clinics. The complaint seeks an accounting to determine the total commissions owed to Mr. Tomlin.

Dr. Tannenbaum -- best known locally as founder of REN Corporation-USA, a publicly traded provider of kidney dialysis services that was sold to Sweden's Gambro AB in 1995 -- declined to comment on the case.

National Nephrology Associates has disputed several of Mr. Tomlin's claims about real estate commissions. A March 27, 2001 letter from its attorney, John A. Gupton III of Baker, Donelson, Bearman & Caldwell, was filed with the lawsuit as an exhibit. It goes into detail about the real estate claims and asserts that Mr. Tomlin actually owes the company more than $9,000.

That letter, however, makes no reference to any claims by Mr. Tomlin about the medical data system idea.

In a February 1996 letter, also filed with the case, Dr. Tannenbaum confirmed to Mr. Tomlin their intention to work together on developing and marketing a patient information system. The data center of one of Dr. Tannenbaum's companies would store patients' medical information and provide doctors with access to it on a call-in basis, with an ID number and password required.

Plans included approaching large organizations such as the American Automobile Association, Comdata and CUC International to pitch the idea of signing up employees or members to the service. Dr. Tannenbaum's company, Mr. Tomlin and various marketing partners would each get a cut of the annual fee paid by each subscriber.

The lawsuit says Dr. Tannenbaum told Mr. Tomlin a month later that he had decided not to pursue the project and terminated the agreement. However, without Mr. Tomlin's knowledge until recently, "Tannenbaum continued to develop and market the program," the filing asserts. "IMRAC has over a million persons participating in the Program."

The web site of IMRAC, which stands for "Internet Medical Records Access Card," says its current structure was developed from Dr. Tannenbaum's "vision of a patient-centered information system to encompass all areas of patient care and to include all the participants in healthcare delivery: providers, patients, payors and ancillary suppliers."

Mr. Tomlin's medical data concept was apparently a side venture for him. He has primarily been engaged in commercial real estate development for many years. In the early 1980s, he was a major player in the market for Class B office space downtown.

Earlier, in 1976, Mr. Tomlin gained brief fame when he married country star Tammy Wynette. The marriage lasted less than a year.

Reached at his home, Mr. Tomlin declined comment on the advice of his attorney, Tom Nebel.