On February 10, 2017, Pomerantz LLP was appointed Co-Lead Counsel in a class action lawsuit against Tenet Healthcare Corporation (“Tenet” or the “Company”) and certain of its officers. The class action, filed in United States District Court, Northern District of Texas, and docketed under 16-cv-02848, is on behalf of a class consisting of all persons or entities who purchased or otherwise acquired Tenet securities between February 26, 2013 and September 30, 2016 inclusive (the “Class Period”). This class action seeks to recover damages against Defendants for alleged violations of the federal securities laws under the Securities Exchange Act of 1934.
Tenet, together with its subsidiaries, primarily operates acute care hospitals and related healthcare facilities. The Company operates through three segments: Hospital Operations and Other, Ambulatory Care, and Conifer. As of December 31, 2015, the Company operated 86 hospitals, 20 short-stay surgical hospitals, approximately 475 outpatient centers, and 9 private hospitals and clinics, as well as 249 ambulatory surgery centers, 20 imaging centers, and 35 urgent care centers in the United Kingdom.
The complaint alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) certain of Tenet’s hospitals had paid kickbacks for obstetric referrals; (ii) these kickbacks were in violation of federal law; (iii) these kickbacks subjected Tenet to the risk of heightened regulatory scrutiny, as well as substantial fines; and (iv) as a result of the foregoing, Tenet’s public statements were materially false and misleading at all relevant times.
On August 1, 2016, post-market, Tenet announced that the Company had reached an agreement in principle with federal and state authorities pursuant to which the Company would pay nearly $514 million to settle allegations that four Tenet hospitals in Georgia and South Carolina paid kickbacks for obstetric referrals. Under the settlement, two Tenet subsidiaries would plead guilty to one count of conspiracy to violate federal kickback laws.
On this news, Tenet’s share price fell $1.34, or 4.64%, to close at $27.57 on August 2, 2016.
On October 3, 2016, Tenet issued a press release and filed a Current Report on Form 8-K with the SEC, announcing that the Company had finalized the agreement in principle announced on August 1, 2016.
On this news, Tenet’s share price fell $0.91, or 4.02%, to close at $21.75 on October 3, 2016.