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Headline: ASL Strategic Value Fund Sends Letter to Community Health Systems(CHS) Board of Directors accusing noncompliance with Federal Court approved settlement requirements. They suggest that it is time to change management.

Some background: After settling claims of fraud (while denying liability,) CHS paid nearly $150 million to cover claims and actions against officers and directors. This settlement, overseen by United States District Court Judge Kevin H. Sharp required certain actions by the Board and Officers of CHS. In summary, these were requirements to add independent directors to the Board and to engage in activities to improve compliance with government regulations. Among these requirements were duties for a Lead, independent Director who would: (paraphrased)
• Obtain information from all directors in preparing an agenda
• Advise board of quality of information from Community Health that is necessary for Directors to effectively and responsibly perform their duties.
• Assist CHS officers in assuring compliance with law
• Develop agendas with Board and Management
• Compensation committee entirely of Independent Directors
• Restrictions to be applied to Directors’ compensation
There is a long list of restrictions on the Board and on Management.
And, a pathway was set out to examine new independent directors and to bring them onto the BOD.

The Court details are here:

ASL Fund said: “ASL Strategic Value Fund has been a long-term investor in Community Health Systems (CYH: NYSE). We have attempted on several occasions to contact management to voice our concerns about recent operating results. Unfortunately, none of our phone calls were returned. . .” ASL suggested that CHS had not been diligent in appointing new directors. “One can only conclude that Community Health’s Board negotiated their settlement agreement in bad faith. One might also conclude that these independent directors have not been added to the Board because truly independent directors would not allow such destruction of shareholder value to go without recourse.” ASL suggested also that “the time has come to monetize the balance of the company’s portfolio of hospitals. Each multiple point increase in EBITDA (above 7 times) is worth an additional $16.50 per share.”

“It is time for the Board to take immediate action. Management’s previous missteps have resulted in billions of dollars of shareholder losses, all the while reaping tens of millions of dollars in compensation. The Board has a fiduciary obligation to hold management accountable and to maximize the value for the shareholders of this company.”

Here is the site for accusations in the letter from ASL:
One can only wonder how much money is spent by CHS on legal defense that could have been spent on improving quality of care. How much longer will Lutheran Health Network be managed by phone calls from Nashville and by a parade of executives arriving and departing on private jets? How long now before CEO, Mr. Wayne Smith, can “focus on quality improvements, patient experience and physician relationships.” It is far past a reasonable time as ASL now says.

Phone calls to Lutheran Hospital were not returned by Mr. Poore’s Secretary or by Mr. Poore.