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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. Thank you, John Smith, for pointing out a needed correction. The article has been revised.

  2. The "National institute for Justice" is an agency for the Dept of Justice. That is not the law firm you are talking about in this article. The "institute for justice" is a public interest law firm. http://ij.org/ thanks for interesting article however

  3. I would like to try to find a lawyer as soon possible I've had my money stolen off of my bank card driver pressed charges and I try to get the information they need it and a Social Security board is just give me a hold up a run around for no reason and now it think it might be too late cuz its been over a year I believe and I can't get the right information they need because they keep giving me the runaroundwhat should I do about that

  4. It is wonderful that Indiana DOC is making some truly admirable and positive changes. People with serious mental illness, intellectual disability or developmental disability will benefit from these changes. It will be much better if people can get some help and resources that promote their health and growth than if they suffer alone. If people experience positive growth or healing of their health issues, they may be less likely to do the things that caused them to come to prison in the first place. This will be of benefit for everyone. I am also so happy that Indiana DOC added correctional personnel and mental health staffing. These are tough issues to work with. There should be adequate staffing in prisons so correctional officers and other staff are able to do the kind of work they really want to do-helping people grow and change-rather than just trying to manage chaos. Correctional officers and other staff deserve this. It would be great to see increased mental health services and services for people with intellectual or developmental disabilities in the community so that fewer people will have to receive help and support in prisons. Community services would like be less expensive, inherently less demeaning and just a whole lot better for everyone.

  5. Can I get this form on line,if not where can I obtain one. I am eligible.

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