Porter County is in a legal tangle with the owner of Porter hospital, Community Health Systems, over an issue that has its roots in the sale of hospital two years ago.

A software vendor, Infor Global Solutions, last August filed suit in Tennessee against Community, the Porter County Commissioners, and the former hospital board of trustees, claiming improper use of computer software. The vendor is seeking damages of $3.4 million.

According to Porter County Attorney Gwenn Rinkenberger, the software was in use prior to the hospital sale and was not assigned to a new owner at the time of the sale. After the sale, the Infor suit contends, the hospital continued to use the software and upgraded it, without paying the fees.

Rinkenberger said that the county’s position is that either the hospital needed to negotiate a new contract or obtain the company’s consent to assign a new owner to the original license. That apparently was not done.

Porter County’s position is that it had limited liability over the continued use of the software, and, as part of a court-ordered remediation, the county paid a settlement of $200,000 to get out of the suit. The county’s position was that it acted in good faith to get the original contract assigned prior to the sale and that it did not want to pay the added expense of being involved in court proceedings in Tennessee, Rinkenberger said.

But since then, Community filed a counter-claim against the county, both in the Tennessee court and in Porter County, citing an indemnification clause in the 2007 hospital purchase agreement. Under that indemnification clause, the county would assume liability and defend the hospital over disputes that may arise for which the county was responsible. But Rinkenberger said the county will not indemnify the hospital on this issue, since it cannot be held responsible for any continued software use or upgrade that happened after the sale.

“All we can attest to is what occurred before the sale,” she said.

As a result of the cross-claim, Porter County has now been brought back into the Tennessee suit, in addition to the suit filed in Porter County courts.

Rinkenberger said Porter County is now considering filing a counter-claim of its own against the hospital, seeking reimbursement of the $200,000 the county paid.

The county is being represented in the lawsuit by Rinkenberger and by the Indianapolis firm of Hall Render, which assisted the county in the hospital sale and which the Porter County Council recently selected to represent the county in its dispute over the Northwest Indiana Regional Development Authority.

Rinkenberger said this week that the county has also been served with notice of another suit involving Community Health System, this time from Unity Physicians, the medical group that was contracted to run the hospital’s emergency room when the hospital was county owned.

Posted 5/7/2009