The University of Southern California on Monday said it had signed a non-binding letter of intent for the university to buy USC University Hospital and USC Norris Cancer Hospital from a subsidiary of Tenet Healthcare Corp.

USC filed a lawsuit in August 2006 to terminate the school’s relationship with Tenet, which has struggled since it was enveloped in a Medicare reimbursement scandal in 2002. Tenet, once the largest hospital operator in Los Angeles County, filed a counterclaim in November seeking monetary damages. The sale is intended to resolve the lawsuit.

“We would have preferred to continue our long-standing partnership with the University,” said Tenet Chief Executive Trevor Fetter in a statement. “However, we explored every avenue to resolve this dispute and have now decided to reach a settlement and move forward.”

Financial terms of a sale are still under negotiation, according a Tenet spokesman. Tenet built and has operated the 411-university hospital since 1991, and built and opened the 60-bed cancer hospital in 1983. The sale would include a $150 million patient tower under construction. Tenet leases the land from the university.

University officials declined to detail how the hospitals would be administered following the sale, but university President Steven Sample said in a statement, “This acquisition would enable us to reach our vision of a fully integrated health care organization on USC’s campus.”

Following the sale Tenet would be left with four community hospitals in the county, though the Dallas-based hospital operator plans to sell one of those properties, the two-campus Encino-Tarzana Medical Center.