The stock price of Health Management Associates took a hit as analysts noted the resignation of the company's general counsel coincided with the publication of a news story about a whistle-blower who claimed he was fired for aggressively pursuing allegations of billing illegalities.
HMA stock falls as analysts note legal feud, general counsel's resignation
Stock in Naples, Fla.-based HMA plunged overnight Monday and gradually regained some value during trading Tuesday, ending the day about 13% down from its closing price Monday of $6.96.
The stock changes followed what a company spokeswoman called a coincidence of timing involving the announcement of the immediate resignation of General Counsel and Senior Vice President Timothy Parry. The announcement, which also said Parry would have an effective retirement date of March 2, was made in a Jan. 5 filing with the Securities and Exchange Commission.
Also on Jan. 5, Health News Florida reported on a lawsuit filed under Florida's private-sector whistle-blower law that alleges the company fired its former compliance director, Paul Meyer, who was a former longtime FBI agent covering healthcare fraud in Florida before joining the for-profit hospital operator.
Meyer's lawsuit in U.S. District Court in Fort Lauderdale says (PDF) that he was fired by HMA on Sept. 6, 2010, the same day he notified executives that he intended to alert government investigators to HMA billing policies that he said violated federal law involving whether patients were treated as outpatients or admitted under a more lucrative label of inpatients. Meyer's lawsuit alleges that his firing violated Florida's Private Sector Whistle Blower's Act, asking a judge to impose actual and punitive damages against HMA.
HMA has filed a counterclaim against (PDF) Meyer, saying that he violated a non-disclosure agreement covering confidential information by refusing to provide internal records that were part of an investigation at the time. The counterclaim said Meyer was fired for being insubordinate after holding onto the records, for which HMA had received a subpoena from HHS' inspector general's office.
MaryAnn Hodge, an HMA spokeswoman, noted on Tuesday that the company was very confident about its counterclaim against Meyer. She also characterized Meyer's lawsuit as a “wrongful termination” case.
She said the timing of the local news story about the Meyer litigation and the announcement of the general counsel's departure were not related. “There really is no connection. Unfortunately, the timing is the only connection,” Hodge said. “The two kind of bumped into each other.”
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