HCA Holdings 2011 Annual Report Download - page 138

HCA HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
NOTE 11 — CONTINGENCIES
We operate in a highly regulated and litigious industry. As a result, various lawsuits, claims and legal and
regulatory proceedings have been and can be expected to be instituted or asserted against us. The resolution of
any such lawsuits, claims or legal and regulatory proceedings could have a material, adverse effect on our results
of operations or financial position.
Health care companies are subject to numerous investigations by various governmental agencies. Under the
federal false claims act (“FCA”) private parties have the right to bring qui tam, or “whistleblower,” suits against
companies that submit false claims for payments to, or improperly retain overpayments from, the government.
Some states have adopted similar state whistleblower and false claims provisions. Certain of our individual
facilities have received government inquiries from federal and state agencies and our facilities may receive such
inquiries in future periods. Depending on whether the underlying conduct in these or future inquiries or
investigations could be considered systemic, their resolution could have a material, adverse effect on our results
of operations or financial position.
We are subject to claims and suits arising in the ordinary course of business, including claims for personal
injuries or wrongful restriction of, or interference with, physicians’ staff privileges. In certain of these actions the
claimants may seek punitive damages against us which may not be covered by insurance. It is management’s
opinion that the ultimate resolution of these pending claims and legal proceedings will not have a material,
adverse effect on our results of operations or financial position.
The Civil Division of the Department of Justice (“DOJ”) has contacted the Company in connection with its
nationwide review of whether, in certain cases, hospital charges to the federal government relating to implantable
cardio-defibrillators (“ICDs”) met the Centers for Medicare & Medicaid Services criteria. In connection with this
nationwide review, the DOJ has indicated that it will be reviewing certain ICD billing and medical records at 95
HCA hospitals; the review covers the period from October 2003 to the present. The review could potentially give
rise to claims against the Company under the federal False Claims Act or other statutes, regulations or laws. At
this time, we cannot predict what effect, if any, this review or any resulting claims could have on the Company.
On October 28, 2011, a shareholder action was filed in the United States District Court for the Middle
District of Tennessee. The case seeks to include as a class all persons who acquired the Company’s stock
pursuant or traceable to the Company’s Registration Statement and Prospectus issued in connection with the
March 9, 2011 initial public offering. The lawsuit asserts a claim under Section 11 of the Securities Act of 1933
against the Company, certain members of the board of directors, and certain underwriters in the offering. It
further asserts a claim under Section 15 of the Securities Act of 1933 against the same members of the board of
directors. The action alleges deficiencies in the Company’s disclosures in the Registration Statement relating to:
(1) accounting for its 2006 recapitalization and 2010 reorganization; (2) the Company’s failure to maintain
effective internal controls relating to its accounting for such transactions; and (3) the Company’s revenue growth
rate. Subsequently, two additional class action complaints setting forth substantially similar claims were filed in
the same federal court. All three of the cases have been consolidated.
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