Community Health Systems Inc. fell the most in more than 10 years after Tenet Healthcare Corp. sued the company for allegedly overbilling Medicare. Tenet also declined, sinking as much as 20 percent.
Tenet, which rejected an unsolicited bid last November from Community Health, seeks to compel the hospital operator to disclose how it admits patients to hospitals for “financial rather than clinical purposes,” according to a Securities and Exchange Commission filing today in which Tenet said it filed the lawsuit in federal court in Texas.
Community Health plunged $13.80, or 34 percent, to $26.50 at 10:55 a.m. in New York Stock Exchange composite trading, after sinking 45 percent, the biggest intra-day decline since June 9, 2000. Tenet fell $1.15, or 15 percent, to $6.40, after declining as much as 20 percent, the most since June 1, 2010.
Community Health, the largest publicly traded hospital company in the U.S., bid $6 a share in cash and stock, or $7.3 billion, in November to acquire Tenet. Tenet rejected the offer in December, saying it wasn’t “remotely fair.”
“CHS is making false and misleading statements to Tenet’s shareholders in the hope that they will exert pressure upon Tenet to accept an inadequate offer,” Tenet said in the complaint that was included with the SEC filing.
Tomi Galin, a spokeswoman for Franklin, Tennessee-based Community Health, didn’t immediately return a call seeking comment.
© Copyright 2016 Bloomberg News. All rights reserved.