Goldman Sachs Comments On Tenet Healthcare's Recent Lawsuit Filing Against Community Health

Tenet THC recently filed a lawsuit against Community Health CYH alleging CYH has been “systematically overbilling Medicare and likely other payers by converting emergency room visits to medically unnecessary inpatient admissions.” As part of its argument, THC alleges that CYH use of “observation status” is “less than half the national average for US hospitals” and sees “no legitimate explanation for the difference.” THC asserts “CHS may well be subject to liability and damages of well over $1 billion for its practices during the 2006-2009 period.” Finally, THC argues its allegations have “implications for the CYH $6 proposal to acquire Tenet” in that CYH stock “is worth less than stated” and the company's “ability to finance the cash portion of the offer may be impaired.” The litigation seeks to compel CYH to disclose the “risks and financial impact of its admissions strategy.” CYH responded that the THC allegations “are completely without merit” and an attempt to “distract shareholders from CYH's pending offer.” Goldman remains not rated on THC and CYH THC closed Monday at $6.44 CYH closed Monday at $25.89