HCA Holdings 2012 Annual Report Download - page 141

HCA HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 11 — CONTINGENCIES AND LEGAL CLAIM COSTS (continued)
Securities Class Action Litigation
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 alleged various deficiencies in the Company’s disclosures in the Registration Statement.
Subsequently, two additional class action complaints setting forth substantially similar claims were filed in the
same federal court. All three cases were consolidated. On July 13, 2012, the lead plaintiff filed an amended
complaint asserting claims under Sections 11 and 12(a)(2) 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 and Hercules
Holdings II, LLC, a majority shareholder of the Company. The consolidated complaint alleges deficiencies in the
Company’s disclosures in the Registration Statement and Prospectus relating to: (1) the accounting for the
Company’s 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 Medicare and Medicaid
revenue growth rates.
Health Midwest Litigation
In October 2009, the Health Care Foundation of Greater Kansas City, a nonprofit health foundation, filed
suit against HCA Inc. in the Circuit Court of Jackson County, Missouri and alleged that HCA did not fund the
level of capital expenditures and uncompensated care agreed to in connection with HCA’s purchase of hospitals
from Health Midwest in 2003. The central issue in the case was whether HCA’s construction of new hospitals
counted towards its $450 million five-year capital commitments. In addition, the plaintiffs alleged that HCA did
not make its required capital expenditures in a timely fashion. On January 24, 2013, the Court ruled in favor of
the plaintiff and awarded at least $162 million. The Court also ordered a court-supervised accounting of HCA’s
capital expenditures, as well as of expenditures on charity and uncompensated care during the ten years following
the purchase. Should the accounting fail to satisfy the Court concerning HCA’s compliance with its capital and
charity care commitments, the amount of the judgment award could substantially increase. The Court also
indicated it would award plaintiff attorneys fees. HCA recorded $175 million of legal claim costs in the fourth
quarter of 2012 related to this ruling; however, the Company plans to appeal the ruling.
NOTE 12 — LEASES
We lease medical office buildings and certain equipment under operating lease agreements. Commitments relating to
noncancellable operating leases for each of the next five years and thereafter are as follows (dollars in millions):
For the Year Ended December 31,
2013 .................................................... $ 301
2014 .................................................... 283
2015 .................................................... 225
2016 .................................................... 178
2017 .................................................... 145
Thereafter ................................................ 870
2,002
Less sublease income ....................................... (44)
$1,958
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