Community Health Systems Under Long Term Investor Investigation

If you are a current long term investor in shares of Community Health Systems (NYSE CYH) and continue to hold those shares, you have certain options and you should contact the Shareholders Foundation, Inc.

To have your information reviewed for options and to recieve notifications about this investigation, please use this form. You may also send an email to, or call us at (858) 779-1554.
Company Name(s): 
Community Health Systems
Affected Securities: 

An investor in Community Health Systems shares filed a lawsuit on behalf of those who purchased Community Health Systems securities only between July 27, 2006 and April 8, 2011, against Community Health Systems, Inc. for allegedly violating Federal Securities Laws.
Meanwhile an investigation on behalf of current long term investors in Community Health Systems (NYSE:CYH) including those who (purchased their CYH shares (also) prior to 2010 and continue to hold those shares was announced.

The investigation by a law firm on behalf of current long term investors in stocks of Community Health Systems (NYSE:CYH) concerns whether certain current and/or former members of Community Health Systems’ board of directors and certain executive officers can be held liable in connection with the alleged Securities Laws violations in the lawsuit filed by investors who purchased CHY shares only between July 27, 2006 and April 8, 2011

According to this complaint the plaintiff alleges that Community Health Systems, Inc. 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’ true financial condition, business and prospects.

Community Health Systems’ 12months Total Revenue substantial increased over the past four years. Community Health Systems 12months Total Revenue almost doubled from $7.063billion in 2007 to $12.986billion in 2010. Its Net Income increased almost 10 times, from $30.29million in 2007 to $279.98million in 2010. Shares of Community Health Systems 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 CYH shares reached over $42 in March.
Then on April 8, the Wall Street Journal published an article concerning Community Health System CEO's 2010 Compensation, which rose to nearly $21M. 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 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. (CYH) overbilled Medicare.

On April 11, 2011, Tenet Healthcare Corp had filed a lawsuit alleging securities fraud violations by Community Health 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’ 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.

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 (CYH) hostile takeover bid. Tenet Healthcare has been fighting Community Health's unsolicited $6 a share, $3.3 billion cash and stock offer since late last year.

However, on April 15, 2011, Community Health 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 (Public, NYSE:CYH) fell from over $40 in the beginning of April to recently slightly under $29 per share.