Tenet Healthcare Seeks Damages for Fending Off Community Health Buyout Bid

Tenet Healthcare Corp. (THC) will seek damages for the cost of resisting Community Health Systems Inc. now-terminated takeover bid, a Tenet lawyer said.

Community Health dropped a $7.3 billion offer to buy Dallas-based Tenet on May 10 after Tenet had rejected a takeover three times. Community Health, the second-largest U.S. hospital operator, also withdrew a slate of 10 nominees for Tenet’s board.

While fending off the offer, Tenet had sued Franklin, Tennessee-based Community Health, alleging the hospital operator systematically admitted patients for financial rather than medical purposes and overcharged Medicare.

“They have withdrawn their slate of officers, so that issue has gone away,” Rob Walters, the lawyer for Tenet, said after a hearing in federal court today in Dallas. “We still have the costs and economic impacts associated with the effort they made.”

Walters told U.S. District Judge Barbara M.G. Lynn that Tenet will proceed with the lawsuit. He didn’t say how much the company would seek in damages. Tenet has until May 16 to file an amended complaint, according to an order issued by Lynn.

“The law did not support Tenet’s original complaint,” Peter Duffy Doyle, a lawyer for Community Health, said after the hearing. “There will be no basis for any further amended complaint, and we will oppose any claims against Community Health.”

The judge told the lawyers today that the suit had lost its urgency once Community Health withdrew its bid.

“It’s gone from hot potato to the slow simmer pile,” she said.

The case is Tenet Healthcare Corp. v. Community Health Systems Inc. (CYH), 3:11-cv-00732, U.S. District Court, Northern District of Texas (Dallas).

To contact the reporter on this story: Tom Korosec in Dallas at tkorosec@sbcglobal.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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