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Monday, February 26, 2018 10:15 pm

Bauer gets positive, negative rulings in Lutheran Health case

SHERRY SLATER | The Journal Gazette

A Tennessee court ruled on Monday that Brian Bauer, former CEO of Lutheran Health Network, can continue working for Indiana University Health. 

The decision isn't a surprise because Judge Joseph A. Woodruff on Feb. 14 indicated that regardless of whether Bauer is bound by terms of a stock option agreement, the agreement "doesn't prohibit competition." 

But the court ruled against Bauer on other counts, saying Bauer isn't allowed to: 

* Recruit Lutheran Health Network employees to work at IU Health 

* Use confidential or proprietary Lutheran network information in his role with IU Health 

* Strike a deal to develop a competing health care network with an investor that has received protected information about Lutheran's network from Bauer 

In addition, Bauer must try to recover confidential, proprietary Lutheran Health Network information from anyone he previously shared it with, including New Mountain, a venture capital private equity investor tied to the Menard family. 

When questioned under oath, Bauer admitted he delivered protected information to New Mountain, according to the ruling. But Bauer denied providing the same information to IU Health. 

Tomi Galin, Community Health Systems spokeswoman, said the ruling validates the lawsuit filed by her employer, which owns Lutheran Health Network. 

"The court's rulings directly contradict Bauer's repeated and erroneous claims that the litigation against him is 'baseless' and 'without merit,' " Galin said Monday in an email. "The court rulings not only demonstrate that the litigation has merit – they also ensure that the litigation will proceed and prohibit Bauer from continuing to use Lutheran's confidential information for his personal gain." 

In his ruling two weeks ago, Woodruff dismissed counts of trade and commercial disparagement, unfair and deceptive business practices, and breach of duty of loyalty against Bauer. 

But the judge allowed other counts to go forward: allegations of breach of contract, defamation, and tortious interference with business relationships. 

The court on Monday found that the plaintiff, Lutheran Health Network, successfully proved it will likely win its case on those counts against Bauer, the ruling states. 

Bauer focused on his win in a statement he emailed to The Journal Gazette. 

"CHS' main request was for the court to prevent me from working with IU Health," Bauer said. "I'm tremendously gratified the court has rejected that request. I'm excited to move forward with IU Health expanding access to high quality health care in Fort Wayne." 

IU Health has announced plans to open an adult primary care facility on the city's southwest side at 7230 Engle Road, the first of possibly several locations. Riley Children's Health, which is under the IU Health umbrella, this month opened a pediatric specialty clinic on the city's north side. 

CHS's amended complaint against Bauer, filed Dec. 27, accuses Bauer of engaging in "a long-planned scheme" to drive down the network's value to force a sale. The lawsuit says Bauer traveled to Wisconsin and pitched Lutheran's network to officials at privately held retailer Menard Inc., which has ties to New Mountain. The venture capital group allows the Menard family to diversify its investments. 

After that effort failed, the filing said, 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 2017. 

sslater@jg.net