Pittsburgh-based West Penn Allegheny Health System reported losses of $24.7 million in the most recent quarter, and now the financially beleaguered system may face a civil injunction from the U.S. Securities and Exchange Commission, according to a Pittsburgh Tribune-Review report.
This week, SEC officials issued a Wells Notice to West Penn, which essentially said the financial regulatory agency may sue the health system over previous infractions. The SEC investigated West Penn in 2008 over an accounting error, according to the report. West Penn officials admitted revenue was overstated by $73 million that year, and the health system issued a restatement, which led to a $62.8 million loss for the year.
Although West Penn officials said the accounting error occurred due to "new accounting procedures," the SEC said there may be evidence West Penn was intentionally trying to mislead bondholders, according to the report. Currently, West Penn has more than $750 million in bond debt.
The SEC, which did not comment in the article, will vote soon on whether it will pursue a lawsuit. If the SEC does pursue a lawsuit, West Penn is likely to go after a settlement and fine because if it lost in court, bondholders would flood the system with lawsuits of their own, said Douglas Branson, a University of Pittsburgh business law professor, in the report.
This week, SEC officials issued a Wells Notice to West Penn, which essentially said the financial regulatory agency may sue the health system over previous infractions. The SEC investigated West Penn in 2008 over an accounting error, according to the report. West Penn officials admitted revenue was overstated by $73 million that year, and the health system issued a restatement, which led to a $62.8 million loss for the year.
Although West Penn officials said the accounting error occurred due to "new accounting procedures," the SEC said there may be evidence West Penn was intentionally trying to mislead bondholders, according to the report. Currently, West Penn has more than $750 million in bond debt.
The SEC, which did not comment in the article, will vote soon on whether it will pursue a lawsuit. If the SEC does pursue a lawsuit, West Penn is likely to go after a settlement and fine because if it lost in court, bondholders would flood the system with lawsuits of their own, said Douglas Branson, a University of Pittsburgh business law professor, in the report.
More Articles on West Penn Allegheny Health System:
7 Hospitals Receive Credit Downgrades in Past Month
Moody's Downgrades West Penn's Bond Rating With "High Likelihood" of Bankruptcy
West Penn Says Highmark Remains "Best-Suited Partner" Despite Weeks of Tension