August 23, 2006—The University of Southern California (Los Angeles) filed a lawsuit against Tenet Healthcare Corporation (Dallas, Tex) yesterday, seeking to terminate Tenet’s lease and operating agreement on a university hospital.

In USC’s complaint, the university noted that Tenet had been forced to “substantially alter and vary its funding and capital investment” for the hospital after years of litigation and settlements—including, in June, $900 million to settle allegations that it had defrauded the Medicare program—decimated Tenet’s unrestricted cash.

“With the material difficulties Tenet has brought upon itself, the company has cut back on its financial support for the hospital,” Marshall B. Grossman, a lawyer for USC, told The New York Times. “The university has taken this step to protect its reputation and that of its doctors.”

Tenet disagrees. Steven Campanini, a spokesman for the company, told the Times, “The partnership between Tenet and USC has been successful for 20 years. This appears to be an unfortunate negotiation tactic better left to the arbitration provisions in our agreement.”

—Cat Vasko