At least two shareholders have filed class-action lawsuits against Universal Health Services, King of Prussia, Pa., alleging that the company misled investors by failing to adequately increase its provisions for bad debt. The lawsuits, filed in U.S. District Court in Philadelphia, named UHS; Alan Miller, chairman, chief executive officer and president; and Chief Financial Officer Steve Filton as defendants. The lawsuits allege that the company, Miller and Filton knew the company's bad-debt expense was rising as early as July 21, 2003, but failed to make any public statements to that effect until the fourth-quarter earnings report in February. The lawsuits, filed on behalf of all investors who purchased shares between July 21, 2003, and Feb. 27, 2004, allege that UHS did not properly write off accounts that were uncollectible, thereby inflating profits for the last three quarters of 2003. UHS issued a profit warning on March 1, saying that its bad-debt expense was rising and that competition from hospitals and physicians in Aiken, S.C., and McAllen, Texas, could lower profits by as much as 25% for the first quarter, compared with expectations. UHS operates 29 acute-care and 39 behavioral-health hospitals in North America. -- by Vince Galloro
Shareholders accuse UHS of misleading investors
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