A federal judge has dismissed a 1997 shareholder lawsuit filed against Columbia/HCA Healthcare Corp. In the suit, several of the nation's largest pension funds alleged that wrongdoing by the company and its executives depressed the company's stock value.
In an order dated Sept. 3, Judge Thomas Higgins of the U.S. District Court in Nashville dismissed the lawsuit, which New York state Comptroller H. Carl McCall filed in August 1997 on behalf of the state's $90 billion pension fund.
Numerous other pension funds-including the nation's largest, the Sacramento-based California Public Employees Retirement System-followed McCall's lead. The shareholder lawsuits were consolidated in October 1997.
The original lawsuit followed the federal government's criminal fraud investigation into Columbia's business practices, launched in March 1997 with a federal raid on the company's El Paso, Texas, facilities. Four months later, federal warrants were served at Columbia facilities in seven states, and Richard Scott, Columbia chairman and chief executive officer-and other executives-resigned.
In his dismissal order, Higgins said the plaintiffs had made an "unseemly rush to the courthouse."
He affirmed a magistrate judge's July 1998 recommendation to dismiss because the plaintiffs had not brought their demands to the company's board before filing suit.
Theresa Bourgeois, spokeswoman for McCall, responded that there had been a five-month lag between the federal raid in El Paso and the filing of the lawsuit.
When Columbia officials learned of the judge's decision last week, Senior Vice President Vic Campbell fired off an e-mail to company employees applauding the judge's decision.
Columbia is in settlement talks to resolve pending civil fraud lawsuits against the company. The criminal investigation is ongoing.
Bourgeois said McCall will confer with the other plaintiffs before deciding whether to appeal.