CHS Discloses Federal Subpoenas

John Commins, May 19, 2011

Community Health Systems Inc. said Wednesday it is fighting legal battles on several fronts that include subpoenas from two federal oversight agencies.

In a filing with the Securities and Exchange Commission, Franklin, TN-based CHS disclosed that it has been has been subpoenaed separately by the SEC, and the Department of Health and Human Services Office of Inspector General in Houston.

The SEC subpoena, dated May 13, requests "documents related to or requested in connection with the various inquiries, lawsuits, and investigations regarding, generally, emergency room admissions or observation practices at our hospitals," CHS CFO W. Larry Cash said in the SEC filing. "The subpoena also requests documents relied upon by the company in responding to the Tenet litigation, as well as other communications about the Tenet litigation."

The May 10 subpoena from HHS OIG calls for 71 patient medical records from a CHS hospital in Shelbyville, TN to be sent to the Assistant U.S. Attorney handling the OIG investigation of a CHS hospital in Laredo, TX. "We are unaware of any connection between these two facilities other than they are both affiliated with us. We will cooperate fully with the Department of Justice and the Office of the Inspector General in this investigation," Cash said in the SEC filing.

Also Wednesday, Cash said in the SEC filing that rival Tenet Healthcare Corp. -- until last week the subject of a hostile takeover attempt by CHS -- has filed an amended lawsuit in federal court in Dallas that "expands on the unverified facts set out in its prior complaint (filed April 11, 2011) and continues to assert that a mathematical difference between our observation visit rate and/or inpatient admission rate and industry averages is, in and of itself, fraudulent."

John Commins

John Commins is a senior editor at HealthLeaders Media.

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