Judge rules ex-Lutheran CEO improperly disclosed CHS' confidential information: 7 things to know

A Tennessee judge issued an order Feb. 26 stating the former CEO of Fort Wayne, Ind.-based Lutheran Health Network improperly disclosed confidential information belonging to LHN and its parent company, Franklin, Tenn.-based Community Health Systems.

Here are seven things to know about the order.

1. In his ruling Feb. 26, Circuit Court of Williamson County Judge Joseph A. Woodruff noted, "Mr. Bauer admitted he delivered LHN's confidential and proprietary information … without authorization … for the purpose of soliciting the recipients' participation in a transaction with certain minority investors in LHN affiliates to purchase LHN's majority interest in the network."

2. Mr. Woodruff's order, obtained by Becker's Hospital Review, prohibits former LHN CEO Brian Bauer from temporarily using and disclosing LHN's confidential or proprietary information, including, without limitation, financial data, operational results and physician recruiting strategies, among other information. He is also prohibited from entering into any commercial transaction for the purpose of developing a competing healthcare network with any person who received LHN and CHS' protected information from Mr. Bauer, and cannot recruit LHN employees to work at IU Health.

3. The judge also ordered Mr. Bauer must recover LHN's protected information from every person he provided it to without LHN's authorization. However, he will be legally allowed to continue working with IU Health, which hired him to advise in a consulting role last year, according to the News-Sentinel.

4. The order follows the judge's previous decision during a Feb. 14 procedural hearing to dismiss three core allegations against Mr. Bauer, which included trade and commercial disparagement, unfair and deceptive business practices, and breach of duty of loyalty.

5. LHN and CHS filed a lawsuit against Mr. Bauer last year, alleging he violated aspects of a nonqualified stock option agreement. Mr. Bauer filed a motion to dismiss the lawsuit in January, arguing the allegations against him can't be proven because they aren't true, among other reasons.

In his ruling, Mr. Woodruff noted, "the court finds Mr. Bauer did accept the terms of the stock option agreement and it is therefore enforceable according to its terms."

6. Tomi Galin, senior vice president of corporate communications and marketing for CHS, told Becker's in a statement Feb. 26, "The court’s rulings directly contradict [Mr.] Bauer's repeated and erroneous claims that the litigation against him is 'baseless' and 'without merit.' The court rulings not only demonstrate that the litigation has merit — they also ensure that the litigation will proceed and prohibit [Mr.] Bauer from continuing to use Lutheran's confidential information for his personal gain."

7. In a statement to the News-Sentinel, Mr. Bauer said he was "tremendously gratified" to continue working with IU Health and is "excited to move forward with IU Health expanding access to high quality health care in Fort Wayne."

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