Another day, another circuit breaker triggered. But this time not in some cheap Chinese fraud, but in "legit" hospital company Community Health Services, which is plummeting following the announcement of a lawsuit filed by Tenet "claiming the rival hospital operator improperly
admitted patients to overbill insurers including Medicare." The stock has now been halted not once... not twice... but three times. And every time it is opened, freefall resumes. The chart says it all: and yes, not even the brilliant SEC contraption of circuit breakers can't do much if anything to prevent reality finally meeting anti-gravity.
Shares of Community Health were down 25 percent at $30.22 on Monday morning on the New York Stock Exchange. Tenet Healthcare shares were down 11.2 percent at $6.70.
The complaint, filed in U.S District Court in Dallas, accuses Community Health of admitting patients to its hospitals for financial reasons who had no clinical need to be admitted, rather than placing the patients under observation.
"CHS's practice of greatly underusing observation status and consequently overusing inpatient admission status has served to overstate its growth statistics, revenues and profits and has created a substantial undisclosed financial and legal liability to the federal government, numerous state governments, private insurance companies and patients," the lawsuit states.
Tenet rejected Community Health's $3.3 billion takeover offer in December, saying it undervalued the company. The $6-a-share cash-and-stock offer represented a 40 percent premium to Tenet's share price at the time.
And yes Tenet is plunging too on concerns the entire space is tainted, and any possible THC bid is gonzo.