AUSTIN – The Texas Supreme Court has rejected a request to review a breach of contract dispute between two nearby hospitals where a lower court reversed a $7.9 million verdict in favor of Lake Travis Transitional LTCH LLC.

Lake Travis Transitional, now known as Lake Travis Specialty Hospital LLC, made its review request earlier this year, insisting that an earlier court erred in applying the “equal inference rule” as part of its rationale for uprooting the initial verdict against Lakeway Regional Medical Center.

The dispute stems from a now eight-year-old arrangement where LRMC offered to acquire LTT’s new medical campus, which at the time was still in the early stages of being erected.

Over the course of the acquisition phase, LTT requested that LRMC sign a confidentiality agreement. Later, LTT workers assigned to the project shared details about construction with LRMC officials, who around that same time were meeting with Housing and Urban Development officials to discuss mortgaging options for the facility.

As a matter of policy, HUD only offers mortgage options to hospitals that have no competition nearby. HUD officials only learned about the new LTT facility being built after giving LRMC a guarantee of assistance on the project.

In order to keep that guarantee in place, LRMC officials allegedly shared private and confidential information about the LTT construction. According to Lexis Legal News, at trial Lake Travis argued that Lakeway Medical ultimately used that confidential information to secure a $166 million HUD-backed mortgage.

In rendering its ruling, the lower appellate court highlighted the equal inference rule, which establishes “that unless there is so little evidence that the jury must make a guess about what happened, the jury can choose between multiple inferences.”

In this instance, the court ruled that there was insufficient evidence to support any inference.

“The court of appeals erred by applying the equal inference rule simply because the circumstantial evidence may give rise to more than one reasonable inference,” the petition said.

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