Tenet Healthcare Corp., Santa Barbara, Calif., filed a securities lawsuit late yesterday against shareholder M. Lee Pearce, a longtime critic of the company and its management. The lawsuit alleges that Pearce is waging what amounts to a proxy campaign to change the company's board -- but has not filed the documentation necessary to do so. Earlier this week, Pearce and his Tenet Shareholder Committee issued a news release contending that Tenet could face up to $6 billion in liability for practices related to Medicare outlier payments. Pearce also urged the CMS, HHS' inspector general's office and the U.S. Justice Department to prosecute Tenet under the False Claims Act and other civil and criminal laws. Gary Cripe, a lawyer representing Pearce and the general counsel of Pearce's committee, said through a spokesman: "We have just received a copy of the complaint and are in the process of reviewing it. Based on our initial review, it appears to be without merit."
In the lawsuit, filed in U.S. District Court, Los Angeles, Tenet asked for a preliminary injunction ordering Pearce to comply with Securities and Exchange Commission requirements, "to cease making false and misleading statements regarding Tenet," and "to correct the false and misleading statements" he and his committee have made. Pearce owns about 25,000 of Tenet's 470 million outstanding shares, the company said. -- by Vince Galloro