Community Health Systems Inc (NYSE: CYH) Investor Securities Class Action Lawsuit 05/09/2011

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Company Name(s): 
Community Health Systems
Case Name: 
Community Health Systems Shareholder Class Action Lawsuit 05/09/2011
Case Status: 
Case Dismissed
Affected Securities
NYSE: CYH
Lawsuit Overview
Type of Lawsuit: 
Shareholder Class Action
Date Filed: 
05/09/2011
Class Period Begin: 
07/27/2006
Class Period End: 
04/08/2011
Court of Filing: 
U.S. District Court for the Middle District of Tennessee
Deadline To File for Lead: 
07/08/2011
Case Dismissed: 
06/16/2016
Summary: 

June 16, 2016 - The court granted defendants' motion to dismiss with prejudice.

September 11, 2012 - Defendants filed a motion to dismiss.

July 13, 2012 - The lead plaintiff filed an amended consolidated complaint.

January 3, 2012 - Lead plaintiff and lead counsel were appointed and all cases were consolidated.

July 8, 2011 - Lead plaintiff motions were filed.

May 12, 2011 - Another investor filed an additional complaint.

May 9, 2011 - An investor in shares of Community Health Systems Inc (NYSE: CYH) filed a lawsuit in the U.S. District Court for the Middle District of Tennessee against Community Health Systems Inc over alleged violations of Federal Securities Laws in connection with certain allegedly false and misleading statements made between July 27, 2006 and April 8, 2011.

According to the complaint the plaintiff alleges on behalf of purchasers of Community Health Systems Inc securities between July 27, 2006 and April 8, 2011 that Community Health Systems Inc and certain of its officers and directors violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by failing to disclose between July 27, 2006 and April 8, 2011 material adverse facts about Community Health Systems Inc’s true financial condition, business and prospects.

Community Health Systems Inc’s 12 months Total Revenue substantial increased over the past four years. Community Health Systems Inc's 12 months Total Revenue almost doubled from $7.063 billion in 2007 to $12.986 billion in 2010. Its Net Income increased almost 10 times, from $30.29 million in 2007 to $279.98 million in 2010. Shares of Community Health Systems Inc rose from as low as $11.35 during Nov 08 to over $41 per CYH share in April 2010. During the following months in 2010 CYH fell to under $27 but closed 2010 at $37.37 per share.

During the first months in 2011 Community Health Systems Inc (NYSE: CYH) shares reached over $42 in March.

Then on April 8, the Wall Street Journal published an article concerning Community Health Systems Inc CEO's 2010 Compensation, which rose to nearly $21 million. Community Health Systems Inc (NYSE: CYH) shares at that day closed at $40.30 per share.

Specifically the plaintiff alleges that the defendants issued between July 27, 2006 and April 8, 2011 financial results that were artificially inflated by virtue of the fact that Community Health Systems Inc was systematically overcharging Medicare, one of its principal sources of revenue.

On Monday, April 11, 2010, the Wall Street Journal published an article entitled "Tenet Claims Community Health Overbilled Medicare" concerning Tenet Healthcare Corp claims that Community Health Systems Inc (NYSE: CYH) overbilled Medicare.

On April 11, 2011, Tenet Healthcare Corp had filed a lawsuit alleging securities fraud violations by Community Health Systems Inc through improper admissions tactics at its hospitals, to inflate revenue and profits from Medicare and Medicaid. Tenet Health Corporation filed a Form 8-K report with the U.S. Securities Exchange Commission (“SEC”) that disclosed the results of Tenet Health Corporation’s own investigation into Community Health Systems Inc’s admission practices. According to Tenet Health Corporation, Community Health Systems Inc had been improperly admitting patients for at least ten years on an inpatient basis, when such patients actually should have been admitted on an outpatient observation basis, resulting in higher payments to Community Health Systems Inc than it was entitled to receive from the Medicare agency.

Community Health Systems Inc (NYSE: CYH) shares fell from $40.30 on April 8 to $25.89 per share on April 11.

The allegations by Tenet Healthcare Corp are the latest step up in its defense against Community Health Systems Inc's (NYSE: CYH) hostile takeover bid. Tenet Healthcare has been fighting Community Health Systems Inc's (NYSE: CYH) unsolicited $6 a share, $3.3 billion cash and stock offer since late last year.

However, on April 15, 2011, Community Health Systems Inc announced that it had received a subpoena from the U.S. Department of Health and Human Services (“DHHS”). The subpoena reportedly requests documents relating to emergency department procedures and is connected to an investigation into potential improper Medicare and Medicaid claims.

Following these events shares of Community Health Systems Inc (NYSE: CYH) fell from over $40 in the beginning of April to recently slightly under $29 per share.

Human Services (“DHHS”). The subpoena reportedly requests documents relating to emergency department procedures and is connected to an investigation into potential improper Medicare and Medicaid claims.

Following these events shares of Community Health Systems Inc (NYSE:CYH) fell from over $40 in the beginning of April to recently slightly under $29 per share.