Hospital operator Community Health Systems Inc. said Tuesday it has asked a U.S. district court to dismiss a lawsuit accusing the company of systematically bilking Medicare.
Last week, rival Tenet Healthcare Corp. charged that Community Health hospitals squeezed more money out of Medicare by admitting thousands of patients that should only have been kept for observation, which is less expensive. The charges come as Community Health continues its $3 billion hostile takeover attempt of Tenet.
Community Health has already called the charges "baseless" and is requesting that the U.S. District Court for the Northern District of Texas throw out the charges. Tenet has said that it estimates improper Medicare billings of between $280 million and $377 million over three years, beginning in 2006, for as many as 82,000 patients. Community has rejected the accusation and said Tenet is trying to distract its shareholders.
Community, based in Franklin, Tenn., went public last December with its bid to buy Tenet for $6 per share in cash and stock. Tenet, based in Dallas, has rebuffed the offer as inadequate, and in January, Community countered that it would nominate 10 directors to Tenet's board.
On Monday, Community Health revised its $3 billion offer to an all-cash bid. Tenet said it would review the revised offer.
Community Health Systems runs 130 hospitals in 29 states, and focuses on fast-growing and non-urban markets. Tenet runs 50 hospitals spread across 11 states, and most of its facilities are in urban and suburban communities.
Shares of Community Health fell 28 cents to $30.92 in afterhours trading after gaining 70 cents, or 2.3 percent, to close the regular session at $31.20.