HCA Faces Class-Action Lawsuit For Allegedly Concealing Revenue Declines
A Nashville district court judge allowed the shareholders' case to move forward by rejecting the hospital chain's arguments that the plaintiffs had missed 'multiple opportunities' to learn more about the company before buying shares.
Reuters: U.S. Hospital Chain HCA Must Face Class Action Over 2011 IPO
HCA Holdings Inc., one of the largest U.S. hospital chains, must face a shareholder class-action lawsuit accusing it of concealing revenue declines and its routine performance of unnecessary cardiac procedures prior to its $4.35 billion initial public offering in March 2011. U.S. District Judge Kevin Sharp in Nashville, Tennessee, rejected HCA's claim that the plaintiffs had missed "multiple opportunities" to learn more about the company before buying their shares, including from media reports, conference calls, and disclosures during the IPO road show. Shareholders alleged that HCA, its directors, its former private equity owners and its investment banks concealed how the company was seeing adverse trends in Medicare revenue including cardiology, and Medicaid revenue per admission and accounted improperly for a 2006 reorganization and a 2010 restructuring (Stempel, 9/23).
Meanwhile, the CEO of a growing medical lab steps down amid a federal probe -
The Wall Street Journal: Health Diagnostic Laboratory CEO Resigns
The chief executive officer of a fast-growing medical laboratory that has collected hundreds of millions of dollars from Medicare resigned amid a federal investigation into its payments of blood-sample fees to doctors. Health Diagnostic Laboratory Inc. CEO Tonya Mallory ceded the reins of the Richmond, Va., company to Joe McConnell, a former Mayo Clinic scientist who co-founded HDL with her five years ago. Ms. Mallory will remain on HDL's board and serve as an adviser to Dr. McConnell, she said in a note to employees (Carreyrou, 9/23).