HMA stocks plummet after lawsuit, counsel resignation
It's like getting rear-ended twice, Health Management Associates (HMA) Chief Executive Officer Gary Newsome said yesterday at the J.P. Morgan Healthcare Conference in San Francisco, describing the company's plunging stocks amid a lawsuit by an ex-employee, who claimed wrongful termination after accusing the hospital operator of Medicare fraud.
The CEO likened the organization's current situation to a collision he had days earlier with his BMW, he told investors and analysts, according to Bloomberg Businessweek.
Former compliance director and retired FBI investigator Paul Meyer said HMA wrongly fired him in September 2011 after he uncovered that the health system allegedly billed Medicare for inpatients who were treated as outpatients. The hospital operator, however, said it fired Meyer for insubordination when he refused to turn over documents for an internal investigation.
As news broke about the lawsuit, which Newsome said "has no merit whatsoever," investors lost confidence. The company lost a fifth of its value over two days with shares falling 7.1 percent on Monday, when an analyst reviewed lawsuit documents, according to Bloomberg.
Even more, after HMA submitted regulatory filings disclosing that its general counsel, Timothy Parry, had suddenly resigned, HMA fell 13 percent, the biggest share drop in three years, the article noted. Shares dropped by as much as 20 percent at one point Tuesday, according to The Wall Street Journal's MarketWatch.
The CEO said there's no connection between the lawsuit and the resignation.
"This is not a fraud case, it is an individual wrongful termination case," HMA representation Susan Toepfer from Stearns, Weaver, Miller, Weissler, Alhadeff & Sitterson in Miami said in another Bloomberg Businessweek article.
Citi Investment Research analyst Gary Taylor said Meyer could be a credible plaintiff. "While the series of events appears concerning, the allegations are hard to reconcile with Health Management's average level of one-day stays," he said in an Associated Press article.
For more information:
- read the Bloomberg article about the stocks and the article on counsel resigning
- here's the MarketWatch article
- read the Associated Press article
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