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Earlier this month, Becker’s Hospital Review–a respected national industry publication–referenced a Journal Gazette story (…/action-in-chs-suit-delayed-…) in a report on the decision to halt depositions in the lawsuit filed by Lutheran Health Network (LHN) against its former CEO, Brian Bauer (…/judge-halts-chs-lut…). In brief, the ruling anticipated that depositions would be a hardship on witnesses given that the Tennessee court would first rule on Bauer’s motion to dismiss the case in late January.

As Becker’s and the Journal Gazette report:

– “The lawsuit contends Mr. Bauer, who was fired from his position as CEO in June, shared confidential information with Indianapolis-based IU Health, which violated [LHN owner Community Health Systems (CHS’)] stock option agreement. The for-profit hospital operator also alleged Mr. Bauer is subject to the agreement’s confidentiality and non disparagement clauses.”

– No signed documents showing that Bauer signed such agreements have been produced.

– Bauer was deposed for nearly eight hours last week and has denied CHS’ charges.

In other CHS/LHN news:

– CHS is involved in litigations in various courts, the most recent of which being the decision by the Federal 6th Circuit Court of Appeals to revive an $891 million securities fraud class action suit brought by shareholders which had been dismissed by the trial court (…/891-million-secu…/). This is an excerpt from a December 14th report from Modern Healthcare: “A three-judge panel for the 6th U.S. Circuit Court of Appeals unanimously ruled that the shareholders plausibly alleged that CHS’ shares plummeted in value due to concealed health system practices surrounding a Medicare fraud scandal. The plaintiffs said CHS officials weren’t forthcoming about the effect the scandal would have on the company’s share value. ‘The lulling misrepresentations thus served the same function as the earlier ones: to convince investors that (CHS’) revenues were sustainable when in fact they were not,’ U.S. Circuit Judge Raymond Kethledge wrote for the panel. ‘All the misrepresentations served the same fraud.”’

– NICHE has no information on a change in the status of the Spokane Washington lawsuit against CHS by Empire Health Foundation in June 2017 (…/empire-health-foundation-sues-de…), and, therefore, assume that it remains on the active docket.

– NICHE understands that, as LHN is the plaintiff in the Bauer case, legal expenses will be paid by LHN. CHS, however, is the defendant in the Spokane case and the 6th Circuit Securities Fraud case. These two matters expose CHS to potentially significant legal and settlement costs which could, in turn, impact the company’s financial condition.