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Friday, January 05, 2018 1:00 am

Bauer plotted Lutheran coup, suit alleges

Hospital's parent company details claims against former CEO

SHERRY SLATER | The Journal Gazette

Lawsuit's status

Community Health Systems filed a lawsuit Nov. 2 in the Circuit Court for Williamson County, Tennessee, against Brian Bauer and up to five John Does using the alias “Sajin Young” on Facebook.

The filing, case number 2017-588, was updated Dec. 27.

Brian Bauer has filed a motion to dismiss the lawsuit. That hearing is scheduled for Jan. 25 in Williamson County.

Brian Bauer, the former CEO of Lutheran Health Network, engaged in “a long-planned scheme” to drive down the network's value to force a sale, a lawsuit alleges.

Community Health Systems, parent company of Lutheran's network, last week amended its Nov. 2 filing against Bauer and up to five John Does using the alias “Sajin Young” on Facebook.

The Franklin, Tennessee, health care system accuses Bauer of breach of contract, breach of loyalty, defamation, trade and commercial disparagement, unfair and deceptive practices, and interfering with existing and prospective business relationships.

The lawsuit says Bauer was the mastermind behind the efforts of 10 local physicians to persuade parent company CHS to sell Lutheran Health Network to a New York private equity firm approved by the doctors. CHS rejected the $2.4 billion buyout offer in May, saying it was at least $1 billion too low.

At that time, Bauer represented himself to CHS, his employer, as unaffiliated with the buyout effort. That was despite the fact that he arranged for the doctors to practice their board presentation in front of Bauer's attorneys, who provided feedback to improve their pitch, the lawsuit says.

Bauer, who denied the allegations Thursday, was fired from his positions as CEO of the network and of Lutheran Hospital on June 12.

According to the revised lawsuit, a month before the 10 physicians formed Fort Wayne Physicians LLC in fall 2016, Bauer met with executives of privately held retailer Menard Inc. to pitch Lutheran Health Network as an investment opportunity.

CHS says Bauer made a trip to Eau Claire, Wisconsin, in September 2016 with Tom Kelley, who was a member of the Lutheran network's board of trustees. It was only after that pitch was rejected that Bauer organized the local physicians to pursue a deal, the lawsuit states.

As proof, the lawsuit alleges that Bauer responded to a friend's email on or about Sept. 19, 2016, that “I have a plan” to “take it over,” referring to Lutheran Health Network. Further, the court document states, the plan was underway.

“Bauer further noted that he would need hundreds of millions of dollars in financing,” according to the lawsuit, which does not reveal the friend receiving Bauer's email.

Bauer issued the following statement by email Thursday: “I look forward to challenging these baseless attacks and claims. It's mine and my family's hope we can move forward as a community and focus on providing great care to our patients and a healthy work environment for our providers. The future for healthcare in Fort Wayne and our region is exciting.”

Reached by phone, Kelley, president of Kelley Automotive Group, said he has a long-standing business and personal relationship with John Menard, owner of Menard Inc.

Both are former IndyCar racing team owners.

Kelley said he visits Menard in Wisconsin two or three times a year. Kelley has sold cars to Menard and the two have had real estate dealings, Kelley said.

Kelley, who resigned from Lutheran's network and hospital boards July 14, declined to say more. He had not seen the court filing as of mid-afternoon Thursday and said he preferred for Bauer to address specific allegations.

The original lawsuit and its amended version were filed in the Circuit Court for Williamson County, Tennessee.

Among the allegations against Bauer, CHS says he shared confidential information with IU Health in violation of CHS' stock option agreement. The lawsuit contends that Bauer is subject to the agreement's confidentiality and non-disparagement clauses because from 2012 to 2014, Bauer cashed in 3,000 stock options for a total profit of more than $74,000.

CHS is asking for unspecified damages and for Bauer and “Sajin Young” to be ordered to stop publicly criticizing CHS. Since the lawsuit was first filed, the Sajin Young account has been removed from Facebook.

The lawsuit says Bauer and his allies have spread untrue stories about quality problems at Lutheran network hospitals, attempted to intimidate CHS officials, and threatened to interfere with the network's daily operations.

sslater@jg.net