What changed in this filing

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Item 1. Legal Proceedings

2025-04-24 compared with 2024-10-24 · 24 added, 36 removed, 45 unchanged (57% of the section changed)

1 unchanged sentence

From time to time, we receive inquiries or subpoenas from state regulators, state Medicaid Fraud Control units, fiscal intermediaries, CMS, the U.S.

Department of Justice and other government entities regarding various Medicare and Medicaid issues.

Department of Justice, or the Department of Justice, and other government entities regarding various Medicare and Medicaid issues.

In addition, we are subject to other claims and lawsuits arising in the ordinary course of our business including lawsuits and claims related to billing and collection practices at our hospitals.

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Settlements of suits involving Medicare and Medicaid issues routinely require both monetary payments as well as corporate integrity agreements.

Additionally, qui tam or “whistleblower” actions initiated under the FCA may be pending but placed under seal by the court to comply with the FCA’s requirements for filing such suits.

In September 2014, the Criminal Division of the U.S.

Department of Justice announced that all qui tam cases will be shared with their Division to determine if a parallel criminal investigation should be opened.

Additionally, qui tam or “whistleblower” actions initiated under the federal False Claims Act, or FCA, may be pending but placed under seal by the court to comply with the FCA’s requirements for filing such suits.

In September 2014, the Criminal Division of the Department of Justice announced that all qui tam cases will be shared with their Division to determine if a parallel criminal investigation should be opened.

The Criminal Division has also frequently stated an intention to pursue corporations in criminal prosecutions, including in its most recent Memorandum dated September 15, 2022.

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Government Investigations and Qui Tam Litigation

On January 11, 2024, we received a CID from the Department of Justice for documents and information relating to a variety of subjects, including practices and procedures related to utilization review, inpatient admissions and inpatient dialysis at our hospitals.

On January 11, 2024, we received a Civil Investigative Demand, or CID, from the Department of Justice for documents and information relating to a variety of subjects, including practices and procedures related to utilization review, inpatient admissions and inpatient dialysis at our hospitals.

Based upon our review of the CID, the documents we have reviewed and the witnesses we have interviewed, we believe at this time that the CID relates to allegations made by a former employee at one of our hospitals in 2022 and that these allegations were thoroughly and fully investigated to our satisfaction at the time they were originally made.

We continue to cooperate fully with this investigation.

On May 4, 2022, our affiliate, Northwest Arkansas Hospitals, LLC, or Northwest, terminated for cause the professional services agreement of Brian Hyatt, M.D., a psychiatrist and former medical director of the behavioral health unit at Northwest, over concerns regarding his medical practices.

On October 31, 2024, the Department of Justice notified us that it is conducting a criminal investigation of Dr.

Hyatt’s conduct while he was the medical director of the behavioral health unit at Northwest.

The Department of Justice has advised Northwest and several of its current and former officers and employees that they are also subjects of its investigation.

We are cooperating fully with the investigation.

Commercial Litigation and Other Lawsuits

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Tower Health appealed the District Court ’ s judgment to the United States Court of Appeals for the Third Judicial District.

The Third Circuit Court of Appeals affirmed the District Court's opinion and ordered the case remanded to the District Court on October 2, 2024.

The District Court will now hear our application for attorney's fees.

The Third Circuit Court of Appeals affirmed

the District Court’s opinion, awarded our attorneys’ fees and costs on appeal, and ordered the case remanded to the District Court on October 2, 2024.

The District Court will now hear our application for attorneys’ fees.

Golden, as Litigation Trustee of the QHC Litigation Trust, and Wilmington Savings Fund Society, FSB, solely in its capacity as indenture trustee v.

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Plaintiff Daniel H.

Golden is the litigation trustee for a litigation trust, which was formed under the plan of reorganization of Quorum Health Corporation, or

QHC, and certain affiliated entities confirmed by order of the United States Bankruptcy Court for the District of Delaware wherein QHC and certain affiliated entities contributed various causes of action to such litigation trust.

Golden is the litigation trustee for a litigation trust, which was formed under the plan of reorganization of Quorum Health Corporation, or QHC, and certain affiliated entities confirmed by order of the United States Bankruptcy Court for the District of Delaware wherein QHC and certain affiliated entities contributed various causes of action to such litigation trust.

Plaintiff Wilmington Savings Fund Society is the indenture trustee for certain notes issued by QHC.

The complaint seeks damages and other forms of recovery arising out of certain alleged actions taken by the Company and the other defendants in connection with the spin-off of QHC, which was completed on April 29, 2016, and includes claims for unjust enrichment and for avoidance of certain transactions and payments by QHC to the Company connected with the spin-off, including the $1.21 billion special dividend paid by QHC to the Company as part of the spin-off transactions.

The complaint seeks damages and other forms of recovery arising out of certain alleged actions taken by the Company and the other defendants in connection with the spin-off of QHC, which was completed on April 29, 2016, and includes claims for unjust enrichment and for avoidance of certain transactions and payments by QHC to the Company connected with the spin-off, including the $1.21 billion paid by QHC to the Company as part of the spin-off transactions.

We filed a motion to dismiss on January 14, 2022, and oral argument on that motion was heard on July 21, 2022.

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Risk F actors

The following supplements the Company ’ s risk factors previously disclosed in the 2023 Form 10-K by adding the following risk factor.

Except as set forth below, there have been no material changes with regard to the risk factors previously disclosed in the 2023 Form 10-K.

Supreme Court decisions affecting the review of federal agency actions could adversely impact our business and operations.

In June 2024, the U.S.

Supreme Court issued decisions affecting judicial review of federal agency-related actions that increase judicial scrutiny of agency authority, shift greater responsibility for statutory interpretation to courts, and expand the timeline in which a plaintiff can sue regulators.

In particular, in Loper Bright Enterprises v.

Raimondo, the U.S.

Supreme Court overruled its prior ruling in Chevron U.S.A., Inc.

Natural Resources Defense Council, Inc., which held that when a statute is ambiguous or silent, courts should not substitute their own judgments regarding the actions of those agencies so long as the federal agencies’ interpretation of the enabling federal statute was reasonable (this was commonly known as “Chevron deference”).

In Loper Bright, the U.S.

Supreme Court, held that courts must instead exercise their independent judgment when deciding whether an agency has acted within its statutory authority, and that courts may not defer to an agency interpretation simply because a statute is ambiguous.

The Loper Bright decision, as well as certain other recent decisions of the U.S.

Supreme Court, could have significant impacts on government agency regulation, particularly within the heavily-regulated healthcare industry, and may have broad implications for our business.

As a result of these decisions, there may be an increase in legal challenges to regulations and guidance issued by federal agencies responsible for regulating various aspects of our business, including HHS and certain of its agencies, such as CMS, the Food and Drug Administration, and the Office of Inspector General.

Certain of these potential legal challenges, if successful, could have a material negative impact on our business, including through impacts on Medicare and Medicaid payment and coverage, the availability of coverage and subsidies to our patients under the Affordable Care Act and other policies affecting the size of the uninsured population, the administration of state Medicaid programs, the enforcement and interpretation of fraud and abuse laws, and other legal matters discussed in the risk factor “If we fail to comply with extensive laws and government regulations, including fraud and abuse laws, we could suffer penalties or be required to make significant changes to our operations” included in Part I, Item 1A of the 2023 Form 10-K.

In addition to potential changes to regulations and agency guidance as a result of legal challenges, these U.S.

Supreme Court decisions may result in increased regulatory uncertainty, inconsistent judicial interpretations, and delays in and other impacts to the agency rulemaking process, any of which could also adversely impact our business and operations.

There have been no material changes with regard to the risk factors previously disclosed in the 2024 Form 10-K.

Unregistered Sale of Equi ty Securities and Use of Proceeds

The following table contains information about our purchases of common stock during the three months ended September 30, 2024.

The following table contains information about our purchases of common stock during the three months ended March 31, 2025.

Purchased (a)

July 1, 2024 -

July 31, 2024

August 1, 2024 -

August 31, 2024

September 1, 2024 -

September 30, 2024

January 1, 2025 -

January 31, 2025

February 1, 2025 -

February 28, 2025

March 1, 2025 -

March 31, 2025

(a) 500,029 shares were withheld to satisfy the payment of tax obligations related to the vesting of restricted stock awards.

(b) We had no publicly announced repurchase programs for shares of our common stock during the three months ended September 30, 2024.

(b) We had no publicly announced repurchase programs for shares of our common stock during the three months ended March 31, 2025.

The ABL Facility and the indentures governing each series of our outstanding notes restrict our subsidiaries from, among other matters, paying dividends and making distributions to us, which thereby limits our ability to pay dividends and/or repurchase stock.

As of September 30, 2024, under the most restrictive test in these agreements (and subject to certain exceptions), we have approximately $300 million of capacity to pay permitted dividends and/or repurchase shares of stock or make other restricted payments.

As of March 31, 2025, under the most restrictive test in these agreements (and subject to certain exceptions), we have approximately $300 million of capacity to pay permitted dividends and/or repurchase shares of stock or make other restricted payments.

Defaults Upo n Senior Securities

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Legal Proceedings