HCA Inc.

Nashville, TN: (Aug-13-07) A shareholders lawsuit was brought against hospital operator HCA Inc., alleging that company executives made false statements about the company's growth, which had the effect of inflating HCA's stock price. The lawsuits claimed the alleged false statements caused the stock to be inflated, and when HCA later reported poorer than expected financial results, the stock price dipped. Several executives sold large amounts of stock before the price dropped, including then-Senate Majority Leader Bill Frist.

The suit was filed following a Securities and Exchange Commission investigation into Frist's order to sell all his stock in the Nashville-based hospital company founded by his father and brother. The sales were completed by July 1, 2005, two weeks before share prices fell 9%. Beginning in November 2005, several lawsuits were filed on behalf of shareholders and consolidated into one action in January 2006. The suits claimed company leaders misstated HCA's financial status between January and July 2005.

In a settlement reached, HCA Inc. has agreed to pay $20 million to shareholders who sued the company over the alleged claims. The settlement was approved by a federal judge in Nashville and HCA does not admit wrongdoing in agreeing to settle. [FORBES: INFLATED STOCK]

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Published on Aug-14-07