I'm not a big fan of replying to AC, but here goes....
When enterprise-grade software is supplied, normally there are plenty of contractual terms that go with it. Requiring that the whole stack (operating system, database, application, whatever else) is under current support from the suppliers is a good demand in exchange for offering guarantees of break-fix support. The company providing support for the patient care component does not want to have the customer making claims of breach of SLA when the database component failed and its respective supplier has halted development and won't take new trouble tickets for the specific version in use since 10 years ago.
In the MS world of licensing where I have some modest experience, I've seen that it is common for MS to charge an annual maintenance fee in return for a number of entitlements for the user. Things like access to patches and upgrade rights (ie: you don't buy the software licence again when a new version comes up, just grab the new version and move on) are not unusual. On top of this, I've also seen independent software vendors and MS technology partners build up more stuff that goes on top of the MS product that was licensed in the first place. These vendors sometimes use the same model of maintenance payments every year to have some sort of cash coming from those customers who bought additional software or customisations to the base product. If the maintenance payments are not made to MS, they do not switch things off (to my knowledge at least) but if the customer changes their mind, MS will charge lapsed years or ask for a new licence to be purchased. Independent vendors may have their own policies in relation to the software they develop on the MS application/stack.
Having read both articles (wow!), I get the impression that while this state in Australia used to be but is no longer a large customer account. They are really the only people using this software any more, and it is a pain in the backside to make a proper upgrade path just for them. They opted out of incremental upgrades, and now a big bang will look expensive and complicated. It is also possible that the software vendor is under obligation to offer guarantees IF they do offer another year or more of maintenance or extend the licence for their software. In what appears to be an exercise in bridge burning, they want the customer to stop using their software unless they completely replace it with a supported version. It's not very Microsoft-y thing to do, but between MS licensing rules, independent vendor licensing rules and specific contracts made when this deal was a big one for a whole state in Australia, this might have exceptional treatment agreed somewhere.
To me it looks like both parties want out of the contract they have and the company going to court is another way to put pressure on the other side.
Some have written in this forum that this would never be a problem if they just used open source software, which is IMHO optimistic. Legacy crap is complicated for everyone, 10 or 20 years of it will make anyone want to have a fresh start. To paraphrase another favourite AC of mine, they really should go with supported apps, that get upgraded and updated on the fly by a cloud services provider. Legacy programmes can be a pain in the backside, compared to centrally managed apps. Cloud! Apps!