Mergers & Acquisitions

Tenet Fights Community Hostile Takeover Bid with Overbilling Allegation

Tenet Healthcare struck back at a hostile takeover bid from Community Health Systems, alleging in a U.S. District Court action filed today that the Fortune 500 company overbills Medicare with improper patient procedures.

According to the New York Times’ DealBook blog, the U.S. District Court for the Northern District of Texas action argues that Community Health Services regularly and improperly admits patients, instead of putting them on observation status, which would be less profitable.

The lawsuit, Tenet Health Care Corp.v. Community Health Systems Inc (PDF), is seen by many as a counter to Community Health Systems’ claim that combining the two companies would save costs.

In November, Dallas-based Tenet rejected Community Health Systems unsolicited $3.3 billion stock and cash buyout offer. In response, Community Health took its offer public, and has moved to replace Tenet’s board with its own nominees.

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