Community Health Asks Judge to Dismiss Tenet Suit Seeking Buyout Costs

Community Health Systems Inc. (CYH) asked a federal judge to dismiss Tenet Healthcare Corp.’s lawsuit seeking to recover costs incurred rebuffing a takeover bid this year.

Lawyers for Franklin, Tennessee-based Community Health asked U.S. District Judge Barbara M.G. Lynn in Dallas today to dismiss the suit, arguing that hospital operator Tenet had no legal standing to seek costs.

Community Health, the second-largest U.S. hospital company, dropped its $7.3 billion bid in May after the board of Dallas- based Tenet rejected the all-cash takeover offer as “grossly inadequate.” A month earlier, Tenet sued Community Health, accusing it of defrauding Medicare, the federal health insurance program. Community Health called the suit “baseless.”

“This lawsuit has nothing to do with righting an actionable wrong,” Community Health said in a court filing. “It is about Tenet’s public relations campaign against its rival.”

Tenet is seeking unspecified “costs and disbursements incurred in connection with analyzing defendants’ materially false and misleading proxy solicitations and statements, and economic harm related thereto.”

The case is Tenet Healthcare Corp. (THC) v. Community Health Systems Inc., 3:11-00732, 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