March 21 Community Health Systems Inc,
which failed in attempts to acquire rival hospital operator
Tenet Healthcare Corp, prevailed in getting a lawsuit
brought against it by Tenet thrown out.
Judge Barbara Lynn of U.S. District Court for the Northern
District of Texas dismissed the suit with prejudice on
Wednesday, citing Tenet's lack of standing to bring the action.
In an unusual move against a hostile suitor, Tenet sued
Community Health, accusing it of admitting too many patients to
its hospitals in order to inflate profits and overcharge
"We believe Tenet's board and management team initiated this
litigation for the purpose of distracting shareholders from our
bid to buy their company," Community Health Chief Executive
Wayne Smith said in a statement. "Today's ruling brings a
conclusion to Tenet's unfounded lawsuit and we are pleased to
put it behind us."
The complaint by Tenet had also sought to recover costs of
analyzing Community Health's bid and slate of proposed
In her ruling the judge cited prior cases, saying they do
not "support the proposition that expenses such as those sought
here can be recovered by the target corporation."
Tenet said the decision to dismiss the lawsuit was not based
on its claims against Community.
"It is important to remember that this was not a ruling on
the substantive claims regarding Community Health's admission
policies; rather this ruling was based on the technical issue of
whether Tenet had standing, following Community Health's
decision to drop its takeover attempt, to recover costs incurred
during Community Health's proxy fight," Tenet spokesman Rick
Black said in an emailed statement.
Tenet had repeatedly rebuffed Community Health's overtures
to buy the company, ultimately turning down a $4.1 billion offer
that amounted to $7.25 per share, saying that it failed to
recognize Tenet's financial position and growth prospects.
Community withdrew its offer on May 9 of last year, ending
the possibility of a marriage of two of the largest U.S.
Community Health shares closed Wednesday down 16 cents at
$23.04, while Tenet shares ended up 2 cents at $5.43, both on
the New York Stock Exchange.