HCA faces class-action lawsuit over 2011 IPO

U.S. District Judge Kevin Sharp has held Nashville, Tenn.-based Hospital Corporation of America must face a shareholder class-action lawsuit for allegedly concealing negative financial information from investors before its $4.35 billion initial public offering in March 2011, according to a report by Reuters.

Shareholders filed their lawsuit against HCA in October 2011. In their lawsuit, the shareholders alleged HCA concealed unfavorable trends in Medicare revenue and Medicaid revenue. The shareholders further alleged HCA improperly accounted for a 2006 reorganization and a 2010 restructuring.


HCA had a $30 IPO price in March 2011, and by October of that year, when the lawsuit was filed, HCA's share price had fallen as much as 43 percent, according to the report.

HCA opposed the request for class certification in the case by arguing investors had many opportunities to learn more about HCA before purchasing their shares. However, the judge disagreed with the company, and held class certification was proper, as the case impacts thousands of investors who are located in various locations. 

HCA said it may appeal the class certification to a higher court, according to the report.

More articles on healthcare industry lawsuits:

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