Judge rules against LSU in Biomed case

A Baton Rouge judge ruled Thursday that LSU failed to negotiate in good faith with the private operator of University Health Hospitals in Shreveport and Monroe, a victory for Biomedical Research Foundation in its fight to retain control of the hospitals.

LSU had asked 19th Judicial Court Judge Todd Hernandez to remove BRF as the operator of the hospitals immediately, claiming the foundation was in breach of the public purpose of its contract.

The ruling effectively dismisses LSU's case, although the university could file a new lawsuit.

"The evidence presented proves by a preponderance that (BRF) made every attempt possible in light of the circumstances presented by (LSU's) failure to collaborate in order to respond to the breach notice or prepare its corrective action plan," Hernandez wrote in his ruling.

"The (cooperative endeavor agreement) is replete with provisions that require the parties to exhaust all possible remedies to a breach in advance of termination and/or withdrawal by a party. ... The court, in consideration of the totality of evidence presented at the (Nov. 4) hearing, finds that (LSU) failed in its obligation under the contract to work collaboratively with the defendant to remedy the alleged public purpose breach," the ruling continued.

Steve Skrivanos, chairman of the BRF board, said he was pleased with the ruling. "We look forward to advancing our partnership with LSU," he said.

"LSU remains committed to addressing the serious problems detailed in the breach of contract lawsuit," university spokesman Ernie Ballard said in a statement. "In response to today’s ruling, we will restart the 45-day negotiation process to follow the procedure as outlined in the CEA. LSU is committed to serving the citizens of Louisiana and beyond by providing unparalleled medical care in the Shreveport and Monroe communities, conducting important biomedical research and training the next generation of medical professionals."

LSU formally served a breach of contract notice to BRF in September, demanding the foundation withdraw as the operator of University Health. LSU formed a new non-profit Sept. 23 — Academic Health of North Louisiana Hospital Management Co. Inc. — to take over.

When BRF declined to withdraw, denying it breached the public purpose of the contract, LSU filed its lawsuit asking the court to remove the foundation.

BRF secured the contract to operate northern Louisiana's two safety-net hospitals in 2013 as part of Gov. Bobby Jindal's plan to privatize the state's charity hospital system.

LSU claims BRF has failed as the operator, damaged the reputation of LSU's contiguous medical school in Shreveport and doesn't have deep enough pockets to run the hospitals.

BRF points to what it says have been almost across-the-board improvements since taking over University Health in Shreveport and University Health Conway in Monroe.

Biomedical Research Foundation also has an ongoing antitrust lawsuit against Willis-Knighton Health System.

Though federal and state lawsuits are separate, they are related. BRF alleges Willis-Knighton is working with LSU to undermine the foundation's operation of the former charity hospitals by siphoning commercially insured patients from University Health to Willis-Knighton.

In September in federal court a judge declined to dismiss BRF's lawsuit against Willis-Knighton, but also declined BRF's request for an injunction to stop Willis-Knighton from opening clinics competing with University Health. If BRF wins the lawsuit, which could go on for years, the foundation could sue Willis-Knighton to recoup any alleged losses.

Vantage Health Plan, an insurance company headquartered in Monroe, is enjoined with BRF in the lawsuit claiming Willis-Knighton is operating an illegal monopoly.

Follow Greg Hilburn on Twitter @GregHilburn1