HCA Holdings 2012 Annual Report Download - page 60

as premature and remanded the case to the trial court. In February 2012, the trial court certified the case for a
possible interlocutory appeal without addressing the attorney fees issue. The New Hampshire Supreme Court
rejected the request for an interlocutory appeal. The parties subsequently reached a stipulation regarding the
attorney fees. The trial court accepted the parties’ stipulation regarding attorneys fees and entered final judgment
on liability and remedies on May 4, 2012. Both sides filed appeals with the New Hampshire Supreme Court, and
briefing will be completed in early February 2013. Oral arguments have not been scheduled, and a decision on
appeal is not anticipated before mid-to-late 2013.
Securities Class Action Litigation
On October 28, 2011, a shareholder action, Schuh v. HCA Holdings, Inc. et al., was filed in the United
States District Court for the Middle District of Tennessee seeking monetary relief. The case sought to include as
a class all persons who acquired the Company’s stock pursuant or traceable to the Company’s Registration
Statement issued in connection with the March 9, 2011 initial public offering. The lawsuit asserted 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 asserted 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, Kishtah v. HCA
Holdings, Inc. et al. and Daniels v. HCA Holdings, Inc. et al., setting forth substantially similar claims against
substantially the same defendants were filed in the same federal court on November 16, 2011 and December 12,
2011, respectively. All three of the cases were consolidated. On May 3, 2012, the court appointed New England
Teamsters & Trucking Industry Pension Fund as Lead Plaintiff for the consolidated action. 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. The Company and other defendants moved to dismiss the amended
complaint on September 11, 2012. The Court has scheduled a hearing on the motion for March 2013.
In addition to the above described shareholder class actions, on December 8, 2011, a federal shareholder
derivative action, Sutton v. Bracken, et al., putatively initiated in the name of the Company, was filed in the
United States District Court for the Middle District of Tennessee against certain officers and present and former
directors of the Company seeking monetary relief. The action alleges breaches of fiduciary duties by the named
officers and directors in connection with the accounting and earnings claims set forth in the shareholder class
actions. Setting forth substantially similar claims against substantially the same defendants, an additional federal
derivative action, Schroeder v. Bracken, et al., was filed in the United States District Court for the Middle
District of Tennessee on December 16, 2011, and a state derivative action, Bagot v. Bracken, et al., was filed in
Tennessee state court in the Davidson County Circuit Court on December 20, 2011. The federal derivative
actions have been consolidated in the Middle District of Tennessee and the parties have agreed that those cases
shall be stayed pending developments in the shareholder class actions. The state derivative action has also been
stayed pending developments in the shareholder class actions.
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 plaintiff alleged that HCA did
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