A three-judge panel for the 6th U.S. Circuit Court of Appeals last week has reinstated New York's shareholders' suit against HCA-The Healthcare Co.
The suit was filed in 1997 on behalf of the state's $90 billion pension fund. The civil suit against what was then Columbia/HCA Healthcare Corp. charged that 13 current and former HCA officials, including former President and Chief Operating Officer David Vandewater, breached their fiduciary duty by mismanaging the company and intentionally or recklessly disregarding signs of fraudulent practices. Vandewater recently became chairman of Behavioral Healthcare Corp. (See story, p. 22).
A U.S. district judge in Nashville dismissed the suit in September 1999 citing the "absence of a conscious board decision."
Reversing his decision, the three-judge panel in Cincinnati wrote, "We find that the particularized facts, when taken together, are sufficient to present a substantial likelihood of liability on the part of at least five of Columbia's directors."
An HCA spokesman said the company hasn't decided whether to appeal.