Community Health seeks to have Tenet lawsuit dismissed

Community Health Systems, Franklin, Tenn., filed a motion to dismiss the lawsuit filed against the company by Tenet Healthcare Corp. alleging Medicare overbilling, according to a Community news release.

Community's motion, filed in U.S. District Court in Dallas, contends that its revised $7.3 billion offer for Dallas-based Tenet removes any basis for a federal securities lawsuit against Community, according to the release. Tenet's lawsuit alleges that Community should have disclosed the risk that it might have to refund money to the federal government and pay fraud fines when it made its original offer to purchase Tenet for $5 per share in cash and $1 per share in Community stock. Community on Monday made its offer for $6 per share in cash. Community also would assume $4 billion in Tenet's debt.

Tenet's allegations that Community hospitals have improperly admitted thousands of Medicare patients who should have been classified as observational visits have nothing to do with the proxy fight between the two companies, Community said in its news release. In January, Community announced a slate of 10 directors that it intends to nominate for election to Tenet's board. Tenet amended its bylaws to delay its annual shareholders meeting till November.

Community plans to disclose more about the practices alleged in the lawsuit during a conference call to discuss its first-quarter results on April 28, according to the release.

A statement issued by a Tenet spokesman said, "This changes nothing. We intend to vigorously prosecute our claims."