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COA disagrees on damages to bidder

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Indiana Court of Appeals judges disagreed today whether a company should be entitled to damages when it lowered its bid for work at a state-run hospital based on fraudulent information from another bidder.

Judges Edward Najam and Terry Crone affirmed the award of damages to Liberty Healthcare Corp. in its suit against Columbus Medical Services Organization for tortious interference with a business relationship, and for treble damages, attorneys' fees, and costs under the Crime Victims Relief Act.

Liberty and Columbus were bidding for the provision of psychiatric medical staffing services at Logansport State Hospital, which is owned by the state. At the time of the bidding, Liberty had been providing services at the hospital. During the request for proposal process, Columbus made misrepresentations and claimed doctors who worked for Liberty expressed interest in working for Columbus under the proposal. Columbus never spoke to these doctors.

As a result of a similar evaluation by the state, it requested Liberty and Columbus submit a second Best and Final Offer; Liberty had lowered its bid in order to win the contract. Columbus came in with the lower price and was awarded the contract. After the fraud was discovered, Liberty entered into a contract with the state, but was stuck at the lower bid price from the second Best and Final Offer. Liberty claimed that if it hadn't been for Columbus' fraud, it would have won the contract earlier on with a higher bid.

In Columbus Medical Services Organization LLC v. Liberty Healthcare Corp., No. 82A04-0808-CV-466, the majority agreed with the trial court's calculation of $486,497 in lost profits directly related to Columbus' fraudulent behavior. The specific amount was based on testimony from Liberty's CFO, who based his testimony on the mathematical calculation of the difference between the profits that would have been realized under the first BAFO and the profits realized under the contract that was eventually accepted by the state. The majority also acknowledged that it wasn't possible to calculate the damages with absolute certainty, but noted that tort damages don't require absolute certainty.

Chief Judge John Baker disagreed with his colleagues, believing the damage award to Liberty is too speculative. The trial court attempted to right the wrongs committed by Columbus, but there's no way of knowing what would have happened if Columbus hadn't committed fraud, been eliminated sooner, or not even participated.

"I also believe that the result reached by the majority leads to bad public policy. No one held a gun to Liberty's proverbial head and forced it to lower its bid. Liberty chose to do so. Admittedly, its decision was based on faulty, likely fraudulent, information, but it was a choice, nonetheless," he wrote.

As a matter of public policy, courts shouldn't award damages to a company that decided it was able and willing to lower its bid on a project, even if that decision was based on a competitor's fraud, he continued.

The chief judge concurred with the majority's conclusion that the Crime Victims Relief Act applied to Liberty. He would reverse the damages award, order a nominal damages award of $1 to Liberty, treble it under the CVRA to $3, and affirm the award of $473,468.04 for attorneys' fees and litigation expenses.

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  1. Unfortunately, the court doesn't understand the difference between ebidta and adjusted ebidta as they clearly got the ruling wrong based on their misunderstanding

  2. A common refrain in the comments on this website comes from people who cannot locate attorneys willing put justice over retainers. At the same time the judiciary threatens to make pro bono work mandatory, seemingly noting the same concern. But what happens to attorneys who have the chumptzah to threatened the legal status quo in Indiana? Ask Gary Welch, ask Paul Ogden, ask me. Speak truth to power, suffer horrendously accordingly. No wonder Hoosier attorneys who want to keep in good graces merely chase the dollars ... the powers that be have no concerns as to those who are ever for sale to the highest bidder ... for those even willing to compromise for $$$ never allow either justice or constitutionality to cause them to stand up to injustice or unconstitutionality. And the bad apples in the Hoosier barrel, like this one, just keep rotting.

  3. I am one of Steele's victims and was taken for $6,000. I want my money back due to him doing nothing for me. I filed for divorce after a 16 year marriage and lost everything. My kids, my home, cars, money, pension. Every attorney I have talked to is not willing to help me. What can I do? I was told i can file a civil suit but you have to have all of Steelers info that I don't have. Of someone can please help me or tell me what info I need would be great.

  4. It would appear that news breaking on Drudge from the Hoosier state (link below) ties back to this Hoosier story from the beginning of the recent police disrespect period .... MCBA president Cassandra Bentley McNair issued the statement on behalf of the association Dec. 1. The association said it was “saddened and disappointed” by the decision not to indict Ferguson police officer Darren Wilson for shooting Michael Brown. “The MCBA does not believe this was a just outcome to this process, and is disheartened that the system we as lawyers are intended to uphold failed the African-American community in such a way,” the association stated. “This situation is not just about the death of Michael Brown, but the thousands of other African-Americans who are disproportionately targeted and killed by police officers.” http://www.thestarpress.com/story/news/local/2016/07/18/hate-cops-sign-prompts-controversy/87242664/

  5. What form or who do I talk to about a d felony which I hear is classified as a 6 now? Who do I talk to. About to get my degree and I need this to go away it's been over 7 years if that helps.

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