Community Health Systems, Inc. Securities Settlement

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Community Health Systems, Inc. Securities Settlement
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The information contained on this web page is only a summary of information presented in more detail in the Notice of Class Certification and Proposed Settlement (the “Notice”), which you can access by clicking here. Since this website is just a summary, you should review the Notice for additional information.

If you are a Class Member, your legal rights will be affected by this Settlement whether you act or do not act.

Please read the Notice carefully

IF YOU PURCHASED THE PUBLICLY TRADED COMMON STOCK OF COMMUNITY HEALTH SYSTEMS, INC. (“CHSI” OR “THE COMPANY”) FROM JULY 27, 2006 THROUGH APRIL 8, 2011, INCLUSIVE (“CLASS MEMBERS”) AND WERE DAMAGED THEREBY, YOU MAY BE ENTITLED TO A PAYMENT FROM A CLASS ACTION SETTLEMENT. CLASS MEMBERS MAY ALSO FILE CLAIMS FOR PURCHASES OF CHSI COMMON STOCK FROM APRIL 11, 2011 THROUGH OCTOBER 26, 2011.

IMPORTANT DATES AND DEADLINES

SUBMIT A PROOF OF CLAIM AND RELEASE
BY JUNE 27, 2020

The only way to be eligible to receive a payment from the Settlement.


EXCLUDE YOURSELF BY SUBMITTING A REQUEST
IN WRITING BY MAY 18, 2020

Receive no payment. This is the only option that might allow you to bring (or continue to bring) an individual lawsuit against the Defendants asserting the legal claims being released in this case, if you have a valid and timely claim.
PLEASE NOTE: Due to the age of the Litigation, it is likely that investor individual claims will be untimely and subject to dismissal.

OBJECT TO THE SETTLEMENT BY SUBMITTING A
WRITTEN OBJECTION BY MAY 18, 2020

Write to the Court about why you do not like the Settlement, the Plan of Allocation and/or the request for attorneys’ fees and expenses.

GO TO THE HEARING ON JUNE 19, 2020,
AND FILE A NOTICE OF INTENTION TO APPEAR
BY MAY 18, 2020

Ask to speak in Court about the fairness of the Settlement. If you submit a written objection, you may (but you do not have to) attend the hearing.


DO NOTHING

Receive no payment. You will, however, still be a Class Member, which means that you give up your right to ever be part of any other lawsuit against the Defendants or any other Released Person about the legal claims being resolved by this Settlement, and you will be bound by any judgments or orders entered by the Court in the Litigation.


The Settlement Fairness Hearing

The Court will hold a Settlement Fairness Hearing on June 19, 2020, at 8:30 a.m., before the Honorable Eli Richardson at the United States District Court for the Middle District of Tennessee, Estes Kefauver Federal Building & Courthouse, Courtroom 874, 801 Broadway, Nashville, TN 37203, for the purpose of determining whether: (1) the Settlement as set forth in the Stipulation of Settlement (the “Stipulation”) for $53,000,000.00 in cash should be approved by the Court as fair, reasonable and adequate; (2) Judgment as provided under the Stipulation should be entered; (3) to award Lead Counsel attorneys’ fees and expenses out of the Settlement Fund and, if so, in what amount; (4) to award Lead Plaintiff pursuant to 15 U.S.C. §78u-4(a)(4) in connection with its representation of the Class out of the Settlement Fund and, if so, in what amount; and (5) the Plan of Allocation should be approved by the Court.

The Court may adjourn or continue the Settlement Fairness Hearing without further notice to Members of the Class.

What is this case about?

Lead Plaintiff’s First Amended and Consolidated Class Action Complaint (“the FAC”) alleges that Defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. §§ 78j(b) and 78t(a). Specifically, Lead Plaintiff alleges that CHSI, the largest for profit hospital system in the United States used aggressive admissions criteria, known as the “Blue Book,” to improperly increase lucrative Medicare admissions. The FAC alleges that on April 11, 2011, Tenet Healthcare Corp. (“Tenet”), an acquisition target of the Company, first revealed CHSI’s long-standing use of the Blue Book in an anti-takeover lawsuit. Lead Plaintiff alleges that Defendants acknowledged that CHSI’s affiliated hospitals (1) had used the Blue Book, but (2) were beginning to switch to third-party-published admission criteria, known as “InterQual.” Lead Plaintiff further alleges that Defendants denied any wrongdoing and misrepresented the expected effect that discontinuing the Blue Book would have on CHSI’s financial performance. Lead Plaintiff alleged that in response to the Tenet lawsuit CHSI’s stock declined $14.41 per share, or nearly 36%, in the heaviest one-day trading volume in the Company’s history.

The FAC also alleges that, following Tenet’s complaint, the Company disclosed a government investigation concerning CHSI’s admission practices, contact by the Department of Justice regarding a recently unsealed whistleblower complaint that made charges similar to Tenet’s, and that CtW Investment Group had sent a letter to CHSI’s Board. The FAC alleges that on October 26, 2011, CHSI released declining admissions results year over year for 3Q2011. CHSI’s report and Defendants’ related disclosures allegedly confirmed to the market that the Company’s historical admissions practices using the Blue Book had driven CHSI’s superior performance and that CHSI’s denials of Tenet’s claims were false.

The FAC also alleges that while in the possession of material, non-public information, Defendants Smith and Cash sold exercised vested stock options in 2009 and 2010 at a substantial profit.

The FAC expanded the class period to capture events that occurred from the filing of Tenet’s lawsuit on April 11, 2011 through October 26, 2011 when the Company reported declining 3Q2011 admissions (the “Extended Class Period”). The FAC alleges that in response to CHSI’s October 26, 2011 disclosures, CHSI stock dropped another 11.4% on October 27, 2011.

Defendants deny all of Lead Plaintiff’s allegations. Defendants contend that they did not make any false or misleading statements and that they disclosed all information required to be disclosed by the federal securities laws.

The Settlement Benefits

The Settlement, if approved, will result in the creation of a cash settlement fund of $53,000,000.00. This fund, plus accrued interest and minus the costs of this Notice and all costs associated with the administration of the Settlement, as well as attorneys’ fees and expenses, and the payment of Lead Plaintiff’s costs and expenses in representing the Class, as approved by the Court, will be distributed to eligible Class Members pursuant to the Plan of Allocation that is described in the Notice.

Any Court orders modifying the proposed Plan of Allocation that is set forth in this Notice will be posted to this website.

The Rights of Settlement Class Members

If you are a member of the Settlement Class, you have the following options:

Submit a Claim Form:

If you are a Class Member and want to claim money from the Net Settlement Fund, you must submit a Claim Form and supporting documentation. You may download a Claim Form under the “Claim Form” link on the left or submit a Claim Form through the settlement website by clicking the Submit your Claim Online link on the left.

Exclude yourself from the Class:

If you are a member of the Class and wish to exclude yourself from the Class, you must submit a request for exclusion such that it is received no later than May 18, 2020, in accordance with the instructions set forth on page 9 of the Notice. If you properly exclude yourself from the Class, you will not be bound by any judgments or orders entered by the Court in the Action related to the Settlement and you will not be eligible to share in the proceeds of the Settlement.

Object to the Settlement:

Any objections must be filed with the Court and delivered to Lead Counsel and Defendants’ Counsel such that they are received on or before May 18, 2020, in accordance with the instructions set forth on page 9 of the Notice.

File a Notice of Intention to Appear:

Ask to speak in Court about the fairness of the Settlement. Requests to speak must be postmarked on or before May 18, 2020. If you submit a written objection, you may (but you do not have to) attend the hearing.

Do Nothing:

If you are a member of the Settlement Class and you do not submit a valid Claim Form, you will not be eligible to receive any payment from the Settlement Fund. You will, however, remain a member of the Settlement Class, which means that you give up your right to sue about the claims that are resolved by the Settlement and you will be bound by any judgments or orders entered by the Court in the Action.


If you have questions, you may call the CHS Securities Settlement Help Line at 877-217-4457 or email info@CHSSecuritiesSettlement.com.

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