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Lab owner sues hospital for breach of contract

Running a lab is a rewarding and difficult profession. In some cases, there are business considerations. Contracts may govern these arrangements. In a recent case, a lab owner accused a hospital of failing to fulfill its agreements as listed within the contract. The case involves a lab owner who went into contract with a large health care system to run a cancer research lab. The lab owner is well known within her field. Lynn Hlatky studied physics and biophysics, receiving a Ph.D. from the University of California, Berkeley. Harvard Medical School recruited the researcher and she joined faculty with the radiation and oncology department after developing a “model for cancer” using physics.

During her career, she developed a lab that she chose to move to a different hospital. This required the transfer of equipment, her entire staff and cell samples. These cell samples required storage in specialized, liquid nitrogen freezers to maintain viability. Once established, she continued and made significant progress with her research.

Five years later, the hospital was purchased by another private, for-profit hospital system. This system did not renew the contract with the lab owner for over a year. Other institutions, including Tufts Medical Center, attempted to have the lab owner relocate to their facilities during this time. The lab owner declined, stating the process of moving the lab was too burdensome.

When a contract was formed, it stated the hospital system was in line with the lab owner’s vision to develop an internationally competitive research program. However, shortly after signing the contract the hospital system changed its vision, moving away from research and shutting down the lab. As a result, she filed a claim against the hospital.

Ultimately, the court ruled in favor of the lab owner and found the hospital system had breached at least two provisions within the contract. The jury awarded the lab owner over $22 million in damages. The court intervened with the damage award, essentially stating $10.2 million was a more appropriate amount. It reasoned $200,000 would cover all court expenses and, based on the lab owner’s testimony, the actual damage from the breach was $10 million.