Court refuses to dismiss lawsuit against former Lutheran Health Network CEO

The former CEO of the Lutheran Health Network has lost his bid to dismiss a November lawsuit alleging he had used inside information to benefit himself and harm the local medical group’s Nashville-based parent company.

According to a statement released by Community Health Systems, the Williamson County, Tenn., Circuit Court on Friday declined to dismiss the lawsuit’s core allegations against Brian Bauer and that it has jurisdiction to hear the case. Bauer had sought to have the case moved to Indiana.

As The News-Sentinel first reported, Bauer in May presented CHS a $2.4 billion offer for LHN from a group led by local physicians. CHS rejected the offer as at least $1 billion too low and subsequently fired Bauer. IU Health later announced plans to enter the Fort Wayne market, saying it had “contracted with Brian Bauer to help us develop our physician practice in Fort Wayne.”

The lawsuit alleged that Bauer and five unnamed defendants had attempted to drive down the value of LHN through misrepresentations about “patient care, capital investment and the financial status (of CHS)” and were “executing a long-range scheme to harm plaintiffs’ business and to drive them from the Fort Wayne market for the purpose of advancing the defendants’ own private economic interests.”

Bauer has contended the lawsuit is an attempt to impede IU Health’s entry into Fort Wayne. CHS has also asked the court to prevent Bauer from working with IU Health, but no ruling has been issued on that request.

“This is an important milestone decision in the litigation . . . because it means the case will move forward and there can be a full airing of the facts and evidence that Bauer and others engaged in a scheme to harm Lutheran Health Network,” CHS said in a statement.

But Bauer also issued a statement calling the lawsuit “baseless” and noting the court will not shield CHS CEO Wayne Smith from having to testify under oath. Bauer said he remains “confident of the outcome” and looks forward to telling his story and improving patient care in Fort Wayne.