The Securities and Exchange Commission has charged the operator of Miami-based Jackson Health System for allegedly misleading investors about its financial condition.
The Public Health Trust operates JHS. The entity, which was created in 1973 by the board of county commissioners, is an independent governing body made up of volunteer citizens.
An SEC investigation found the PHT misstated current and future revenues before making an $83 million bond offering to investors in August 2009. The misstatements were the result of breakdowns in a new billing system that inaccurately recorded revenues, according to the SEC.
The official statement accompanying the bond offering showed the PHT's projection for a $56 million non-operating loss in fiscal year ended Sept. 30, 2009.
Several months after the bonds were sold, external auditors found problems with the valuation of the PHT's patient accounts receivable valuation, and this discovery required a significant accounting adjustment to the reported net income.
The PHT ultimately reported a non-operating loss of $244 million for fiscal year 2009, which was more than four times the projection made to bond investors, according to the SEC.
The SEC said the $56 million non-operating loss in the bond offering's official statement was generated "by the budget department using stale cash collection numbers amid the known problems with the new billing system. The budget department was not updating its collection rates in a timely fashion due to a lack of adequate communication among departments. Therefore, the PHT lacked a reasonable basis for its loss projection, and the official statement was materially misleading," according to the release.
The PHT has agreed to settle the charges. The SEC will not impose a monetary penalty due to the PHT's current financial condition, but the settlement orders the PHT to cease and desist from committing or causing any violations of Sections 17(a) (2) and (3) of the Securities Act of 1933. Those provisions hold that any offer or sale of securities shall not (2) obtain money by making untrue statements of a material fact or (3) engage in any practice that operators or would operate as a fraud or deceit upon the purchaser.
More Articles on Jackson Health System:
Jackson Health System CFO Mark Knight to Face Drunken-Driving Charges
Jackson Health Data Breach Affects More Than 1,400 Patients
Jackson Health System Outsources Medicaid Enrollment, Eliminating 26 Jobs