Aug. 26--A long-running antitrust lawsuit that pitted the region's two main hospitals in a bitter, costly battle over control of the local health care market has been settled.

Leaders of PeaceHealth and Cascade Health Solutions said Monday that they had reached a deal in the eight-year-old case. As part of the settlement, PeaceHealth will pay an undisclosed sum to Cascade for community health programs. The settlement closes the books on a case in which PeaceHealth was ordered to pay McKenzie-Willamette Medical Center $16.2 million for conduct intended to harm its smaller rival, a judgment later overturned.

PeaceHealth, a Catholic-sponsored nonprofit corporation based in Bellevue, operates hospitals in Oregon, Washington and Alaska, including the two Sacred Heart hospitals in Eugene and Springfield. Cascade is a Eugene nonprofit corporation that assumed McKenzie --Willamette's interest in the suit after that hospital merged with a for-profit company.

In a joint interview, Mel Pyne, CEO of PeaceHealth in Oregon, and Cheryl Boyum, CEO of Cascade Health Solutions, refused to discuss financial terms of the deal or to say whether PeaceHealth admitted any wrong-doing or agreed to pay attorney fees.

"We want to focus on the future and working together for the community's benefit," Boyum said. The financial details are "not where we want to focus attention," she said. "The public is most interested in the fact we have settled."

"We're anxious to put this chapter behind us," Pyne said.

In addition to the payment, PeaceHealth agreed to make "a significant unrestricted contribution" to Cascade for community benefit, to be used for such programs as diabetes education, senior care and prescription assistance.

PeaceHealth has agreed to provide financial support for Cascade's plan to build a residential hospice house in Santa Clara, which is set to open in 2010. PeaceHealth also agreed to be a sponsor of the Festival of Trees. The event for many years was the main fundraising event sponsored by McKenzie-Willamette, although it now benefits Cascade Health Solutions. PeaceHealth has never been involved in the event.

After McKenzie-Willamette merged with Triad Hospitals Inc., Cascade was established to provide the health services the hospital no longer wanted to provide, such as hospice, occupational health, adult day care and home health. It was given a 20 percent stake in the hospital and assumed McKenzie-Willamette's interest in the suit.

The settlement ends the lawsuit filed by McKenzie-Willamette in 2002, which at the time was a private, community hospital on the brink of financial ruin. The suit alleged that PeaceHealth used its dominant market power to exclude its smaller rival from lucrative contracts with health insurers.

After a 13-day trial in 2003 in U.S. District Court in Portland, a jury found that PeaceHealth tried to monopolize the local hospital market, engaged in price discrimination and interfered with McKenzie-Willamette's relationships with health insurers. PeaceHealth was ordered to pay McKenzie-Willamette $16.2 million.

Last September, a three-judge panel of the 9th U.S. Circuit Court of Appeals overturned the verdict and sent the case back to the trial court.

Soon after, leaders of PeaceHealth and Cascade started talking settlement. PeaceHealth was represented by Pyne and Karen Shepard, regional vice president for finance; Cascade Health Solutions was represented by Boyum and Walid Saleeby, then the board chairman. After more than six negotiating sessions, they had hammered out the outlines of the settlement, and the lawyers were brought in to write it up.

Boyum and Pyne said the fact that neither of them was directly involved in the litigation -- and the acrimony that had created between leaders of PeaceHealth and McKenzie-Willamette -- made it easier to reach a deal. Neither side was interested in retrying the case.

"Litigation is costly," Boyum said. "We'd much rather put it behind us and focus on fulfilling our missions, which are very much aligned."

Said Pyne, "The driving motivation of this settlement was using our resources to serve our missions as opposed to nonproductive legal costs."