COLUMBIA I: CALPERS JOINS NEW YORK SHAREHOLDER LAWSUIT
The nation's largest pension fund has decided to join NewThis is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.
York State Comptroller H. Carl McCall's shareholder lawsuit
against Columbia/HCA Healthcare Corp., Bloomberg News/New York
Times reports. The California Public Employees' Retirement
System moved to join several other public pension funds in the
suit, which seeks "to recover lost profit and penalties stemming
from a broad government investigation of Columbia's Medicare
billing and other business practices" (10/21). Charles Valdes,
chair of CalPERS' Investment Committee, said, "The nation has
witnessed one of the most extensive and widespread health care
fraud investigations in history. As shareholders, we must take a
decisive stand against Columbia to protect our investment and
ensure that both corrective internal controls and enhanced
corporate governance mechanisms are adopted by the company"
(CalPERS release, 10/20).
Wall Street Journal reports that CalPERS decided to join the
"New York State and Local Retirement System" lawsuit "in response
to a 'pervasive and systematic Medicare fraud.'" (White/Lagnado,
10/21). CalPERS alleges that the fraud occurred because top
officials failed to implement adequate corporate information and
reporting systems and compliance controls. In addition, CalPERS,
which owns more than 3.7 million shares of Columbia common stock,
accuses members of Columbia's board of directors and senior
executives of acts of gross mismanagement, corporate waste, abuse
of control and breaches of fiduciary duty (CalPERS release,
10/20). Specifically, CalPERS claims that Columbia officials
"breached their fiduciary duty to protect shareholders'
interests." The value of CalPERS' investment in Columbia has
fallen $50 million "as Columbia's share price has slumped this
year." Columbia senior vice president and spokesperson Victor
Campbell, responding to the CalPERS suit, said, "I'm not about to
tell you that it's good news, but based on the signals we got in
California (last month) it doesn't surprise us."
Journal reports "[p]ublic pension funds in Louisiana,
Florida and the city of Philadelphia" have either joined the
lawsuit or filed similar lawsuits. Meanwhile, Alan Hevesi, New
York City Controller, "is sending a memorandum to his trustees
recommending that they approve joining in the New York state
lawsuit, according to a top aide." New York City owns nearly 4
million shares of Columbia stock (10/21).