August 2, 2011 / 8:35 PM / in 6 years

Tenet not backing down on Community Health lawsuit

CHICAGO (Reuters) - Tenet Healthcare Corp (THC.N) is moving ahead with its lawsuit accusing Community Health Systems Inc (CYH.N) of improper hospital admissions practices, even after it succeeded in thwarting Community’s takeover bid.

Some analysts had speculated the No. 3 hospital operator might drop the suit against its larger rival after the maneuver helped Tenet fend off Community’s hostile $4.1 billion takeover attempt.

“We have no intention of withdrawing our lawsuit,” Tenet Chief Executive Trevor Fetter said in an interview on Tuesday, after the company’s second-quarter earnings were released. “It’s possible at some point the lawsuit could be settled.”

A hearing on Community’s motion to dismiss the case is set for mid-September in the U.S. District Court in northern Texas, he said.

Community dropped its bid for Tenet in May and withdrew its nominees for election to Tenet’s board after Tenet refused to enter into merger discussions.

    Tenet took the unusual step in April of suing Community Health for allegedly admitting patients for needless stays, overbilling the Medicare program for the elderly and then failing to disclose certain practices to Tenet shareholders.

    The U.S. Department of Justice, various federal prosecutors’ offices and the U.S. Office of the Inspector General are all looking into the allegations.

    Reporting by Susan Kelly; editing by Andre Grenon

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