Stock in Health Management Associates, a Naples-based hospital chain, lost more than 20 percent of its value this week following a series of recent events -- capped by the general counsel's resignation -- that has left investors wondering what is going on.
The series began Jan. 5 with publication of Health News Florida's report on a lawsuit against HMA that accuses the company of overbilling Medicare. The suit was filed by Paul Meyer, a career FBI agent who went to work for HMA as a compliance officer after he retired.
In his wrongful termination suit, Meyer said he was fired in September when he refused to cooperate in a coverup. HMA has denied wrongdoing, saying Meyer refused to turn over confidential documents that belonged to the company.
The story led CRT Capital Group LLC analyst Sheryl Skolnick to study the SEC filings on HMA. Her note to investors on Monday, which went into some detail about possible concerns about the company, drew wide notice. The stock price started to slide.
The next day, HMA submitted a disclosure that its long-time general counsel Timothy Parry had resigned on Jan. 5, an event that had not been expected. An HMA spokeswoman told the Naples Daily News that Parry's departure was for "personal reasons."
But the date of the resignation, Jan. 5, was the same day the HNF story revealing the lawsuit was published, and investors apparently drew the conclusion that there was a connection. The stock fell 13 percent, a big drop for a single day.
On Wednesday, as Bloomberg reported, CEO Gary Newsome offered reassurance that there was "no connection whatsoever" between the two events when he appeared before institutional investors at a J.P. Morgan conference. His speech (hear audio) caused the share price to recover a little.
But it had edged down again by the end of the week. HMA was trading at $5.80 a share at 11 a.m. today, up only a bit from the week's low on Tuesday of $4.81. Today's level is about half of the price it hit in May, $11.74.
Mary Ann Hodge, spokeswoman for HMA, reiterated today that the timing of the resignation and the lawsuit revelation was purely a coincidence.
Parry, reached by cell phone today, declined to comment on the reason for his departure or discuss Meyer's lawsuit. "I'll review it with my lawyer and I'm going to follow his advice," he said.
--Health News Florida is an independent online publication dedicated to journalism in the public interest. Carol Gentry, Editor, can be reached at 727-410-3266 or by e-mail.
