Thursday, March 22, 2012FRANKLIN, Tenn. -- Community Health Systems Inc. is applauding the decision Wednesday by a federal judge to dismiss the lawsuit brought by Tenet Healthcare Corp.
Tenet had filed suit to recoup damages related to a failed merger with CHS, an acquisition attempt that started in 2010 -- the year CHS bought the former assets of Forum Health in the Youngstown, Ohio area, which now operate as ValleyCare Health System.
Dallas-based Tenet claimed it should recoup damages related to its costs associated with analyzing CHS’ proxy filings with the Securities and Exchange Commission as part of its attempt to block the merger and nominate a board of directors. In dismissing the case with prejudice, the judge cited Tenet’s lack of standing to bring the action.
“We believe Tenet’s board and management team initiated this litigation for the purpose of distracting shareholders from our bid to buy their company,” said Wayne T. Smith, chairman, president and CEO of CHS. “From the inception of this lawsuit, we have said there was no basis for Tenet to pursue its self-serving litigation. Today’s ruling brings a conclusion to Tenet’s unfounded lawsuit and we are pleased to put it behind us.
In December 2010, CHS offered to acquire all of Tenet’s common stock for $6 per share in cash and stock and subsequently increased its per share offer to $7.25 in cash. The offer was withdrawn in May 2011.
Last year the federal government launched an investigation into admissions and Medicare billing practices of CHS hospitals related to allegations raised in Tenet’s litigation. Whether that investigation continues remains unknown.
Shares of CHS, which trades on the New York Stock Exchange, closed at $23.04 Wednesday, down 16 cents.
Published by The Business Journal, Youngstown, Ohio.