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Nurses Call on SEC to Investigate Community Health Systems for Misleading Investors in Legal Filings

National Nurses United Press Release, 5/20/14

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As the for-profit hospital giant Community Health Systems (CHS) convened its annual shareholders’ meeting May 20 in New York, the nation’s largest registered nurses organization called on the Securities and Exchange Commission to crack down on CHS for failure to disclose multiple problems in operations of its hospital empire.

In a letter to CHS May 19, National Nurses United called on the SEC staff to review whether CHS has complied with federal law in fully disclosing “financial and operational risks to shareholders and potential investors.”

In particular, NNU believes that CHS consciously and deliberately misled investors by reporting it has “good” labor relations when in reality CHS “labor relations at CHS may be worse than at any other healthcare system in the United States,” wrote NNU.

 “The public has a right to know what’s going on within Community Health Systems and its hospitals and the corporation has a legal duty to disclose material financial and operational liabilities,” said NNU Co-president Jean Ross, RN.  “The CHS campaign of trying to silence registered nurses is starting to create risks for the company that may not only be harmful to patients, but that may create financial concerns among investors too.”

Since January 1, 2013 alone, CHS has been sanctioned with one third of all labor related injunctions issued by federal courts for hospitals CHS operates in California and Ohio.

CHS has also engaged in a systematic pattern of refusing to recognize the democratic rights of its RNs when they have voted for union representation by affiliates of NNU, engaged in widespread harassment and intimidation of RNs for advocating safer patient care conditions, and fired several RNs for protected activity, including speaking at a press conference about CHS actions that put patients at risk, says NNU.

CHS is also a poster child for lawsuits and public investigations of potential Medicare and Medicaid fraud, argues NNU. Among the many agencies scrutinizing CHS behavior are the U.S. Department of Justice, U.S. Attorneys of the Eastern Districts of Pennsylvania and Oklahoma, Middle and Southern District of Florida, Western Districts of New York and North Carolina, Texas and the Attorneys Generals and State of Texas and Georgia.

NNU representatives presented the letter to CHS officials at the shareholders' meeting and addressed the board voicing their concerns.

At a minimum, the SEC should demand CHS submit an amended filing with the real story of what NNU calls its “horrendous labor relations record,” says NNU. 
 
As part of its failure to honestly portray its poor labor relations record, NNU notes, Community Health Systems has failed to disclose in SEC filings financial risks associated with job actions by RNs and other healthcare workers that during the last quarter of 2013 cost the company by its own estimate $10 million, or the equivalent of 7 percent of the company’s total profit in 2013.

CHS efforts to avoid its reporting obligations come just days after the hospital giant pressured a billboard company to remove ads placed by NNU that describe the hospital system’s pricing practices that expose patients to financial ruin.

In a statement to the Nashville Business Journal, CHS’ senior vice president for corporate communications and marketing effectively conceded its role in the removal of the boards, an action that NNU calls a clear attempt to suppress free speech and the public’s right to know about the financial risk for patients at CHS hospitals.
 
“Representatives at the (CHS) hospital in Knoxville (TN) became aware of a billboard in their market and reported concerns… which resulted in the removal of two billboards, one in Knoxville and the other in Biloxi, MS,” said Tomi Galin of CHS.

 

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