According to a complaint filed on October 28, 2011, the defendants violated federal securities laws in connection with allegedly false statements in connection with the Company’s initial public offering. On March 11, 2011, the Company filed its registration statement for an initial public offering.
In a press release dated July 11, 2011, the Company reported disappointing financial results for the second quarter of 2011. According to the Company, these lower than expected results came from a shift from complex surgical cases to less acute medical cases. Following the release, Company shares fell nearly 20%.
On October 1, 2011, Barron’s magazine published an article concerning the Company’s accounting practices surrounding prior business reorganizations. Specifically, the article stated that in an effort to go private in 2006 and the following efforts to take the company public in 2011, the Company did not use the appropriate method to account for the business reorganization. The article also stated the Company chose to use a method no longer accepted by the Financial Accounting Standards Board.
The specific allegation contained in the complaint include: (i) that the Company used improper accounting methods for prior business combinations taking place prior to the IPO in violation of Generally Accepted Accounting Principles; (ii) the company allegedly failed to maintain effective internal controls for its accounting for business combinations; (iii) and the Company failed to disclose trends in revenue growth.
On December 20, 2011, and January 26, 2012, a motion of consolidation were granted by the Court.
On July 13, 2012, an amended consolidated complaint for Violation of the Federal Securities Laws was filed by the plaintiffs against the defendants.
On September 17, 2012, the Court issued an order appointing lead plaintiff and lead counsel in this case.
On May 28, 2013, the Motion to Dismiss filed by the HCA Defendants and joined in by the Underwriter Defendants was GRANTED IN PART and DENIED IN PART. The Motion was GRANTED with respect to Plaintiffs’ allegations that, in regard to its initial public offering, HCA unlawfully failed to disclose (1) an adverse trend in Medicaid Revenue Growth; (2) the potential impact on revenue of proposed Medicaid legislation in Florida and Texas; and (3) an adverse trend in Medicaid Supplemental UPL payments from Texas. In all other respects the Motion is denied.
On September 22, 2014, the Court certified the Lead Plaintiff’s Motion for Class Certification.
On November 4, 2015, various news outlets were reporting that HCA has agreed to a $215 million settlement of this lawsuit.