Lawsuit claims plan to ‘take over’ Lutheran Health went deeper than previously reported
A former executive’s efforts to find a new owner for Lutheran Health Network began earlier and involved more would-be investors than has been previously reported, according to an amendment to the lawsuit filed in November by the network’s Tennessee-based parent company against former CEO Brian Bauer.
As The News-Sentinel first reported, Bauer and a group of local doctors attended a May meeting of the board of Community Health Systems to present a proposal under which the physician-led group would buy the Fort Wayne-based network for $2.4 billion. CHS subsequently rejected the offer as at least $1 billion too low, touching off a wave of terminations and resignations, included Bauer’s.
But according to the amendment to the case filed in Williamson County, Tenn., Circuit Court, Bauer was talking about a plan to “take over” LHN as early as September 2016, noting that such a deal would require hundreds of millions of dollars in financing.
Later that month, the lawsuit contends, Bauer and Tom Kelley, who at the time was a member of the LHN Board, travelled to Eau Claire, Wisc., to present Menard Inc. a chance to buy the network. Menard’s declined, but its “refusal to engage with Bauer’s secret and illegal scheme did not stop Bauer,” the suit adds. “Instead, he began working with a group of Fort Wayne physicians . . . (and) representatives of a New York private equity firm.” Kelley later resigned from the board.
The original lawsuit against Bauer and five unnamed defendants sought unspecified damages because of a “continued pattern of disparagement and defamation, unfair and deceptive practices, and for … interfering with existing and prospective business relationships of (Lutheran). The defendants engage(d) in this unlawful conduct to make good on ongoing threats to harm plaintiffs and their business because of (CHS’) prior refusal to acquiesce in the defendants’ demands to sell to them and others the Lutheran Health Network for less than fair market value.”
Just before the May board meeting, CHS announced plans to invest $500 million in LHN. CHS critics, however, have said the company has failed to reinvest profits in local facilities. Since then, IU Health has announced plans to open facilities in Fort Wayne — an expansion in which Bauer has been directly involved, the lawsuit notes.
Bauer, meanwhile, has asked the court to dismiss the lawsuit.