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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTIONS 13 AND 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT
(DATE OF EARLIEST EVENT REPORTED): MAY 9, 1996
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HORIZON/CMS HEALTHCARE CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 1-9369 91-1346899
(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation or organization) Identification No.)
6001 Indian School Road, N.E.
Suite 530
Albuquerque, New Mexico
(Address of principal
executive offices)
87110
(Zip Code)
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ITEM 5.
Horizon/CMS Healthcare Corporation (NYSE:HHC) announced in a press
release issued on May 13, 1996, that it was served with three additional
class action shareholder lawsuits filed in the United States District Court
for the District of New Mexico (the "New Mexico Federal District Court"). One
of the lawsuits was filed on May 6, 1996 and served on Horizon/CMS on May 10,
1996. The remaining two lawsuits were filed on May 8, 1996, and served on
Horizon/CMS on May 9, 1996, These lawsuits seek to certify a class
substantially identical to the lawsuits previously disclosed by the Company.
In ANNETTE AND JACOB WIESEL, STEVE AND DONNETTE ALDERETTE, AND MICHAEL
CARVER VS. HORIZON/CMS HEALTHCARE CORPORATION, NEAL M. ELLIOTT AND ROBERT A.
ORTENZIO, No. CIV 96-0614-MV, filed in the New Mexico Federal District Court
on May 6, 1996, the plaintiffs, current or former stockholders of the
Company, seek to bring this lawsuit on behalf of all persons who purchased
common stock of Horizon/CMS between August 28, 1995 and March 15, 1996 (the
"Wiesel Class Period"). In this lawsuit, the plaintiffs allege violations of
the federal securities laws. In this connection, the plaintiffs allege that
during the Wiesel Class Period, the named defendants disseminated materially
misleading statements about (i) the Company's prospects for its contract
therapy business, (ii) possible Medicare fraud which, according the
plaintiffs, could jeopardize a substantial portion of the Company's
revenues from Medicare reimbursement, (iii) the status the Company's
consolidation with Continental Medical Systems, Inc. ("CMS"), and (iv) the
revenue recorded in Horizon's second fiscal quarter relating to an agreement
with Tenet Healthcare Corp., even though no payments were actually received.
Horizon/CMS disputes the factual and legal premises upon which the
plaintiffs' lawsuit is based and denies that the plaintiffs are entitled to
any recovery on their claims. To that end, Horizon/CMS intends to contest
this litigation vigorously. Because the lawsuit just began, the Company
cannot now predict the outcome of this litigation; the length of time it will
take to resolve this litigation; or the effect of any such outcome on
Horizon/CMS's financial condition or results of operations.
In S. MICHAEL THEOPHANO VS. NEAL M. ELLIOTT, ROCCO A. ORTENZIO, ROBERT A.
ORTENZIO, KLEMMET L. BELT, JR., RUSSELL L. CARSON, AND HORIZON/CMS HEALTHCARE
CORPORATION, No. CIV 96-0626-MV, filed in the New Mexico Federal District
Court, the plaintiff, a current or former stockholder of the Company, seeks
to bring this lawsuit on behalf of all persons who purchased common of stock
of Horizon/CMS between July 11, 1995 and March 15, 1996 (the "Theophano Class
Period"). In this lawsuit, the plaintiff alleges violations of federal
securities laws. In this connection, the plaintiff alleges that during the
Theophano Class Period, the named defendants disseminated materially
misleading statements about the Company's billing and accounting practices,
operations, results and financial condition. According to the plaintiff,
these allegedly false and misleading statements operated to inflate
artificially the market price of the Company's common stock. Horizon/CMS
disputes the factual and legal premises upon which the plaintiff's lawsuit is
based and denies that the plaintiff is entitled to any recovery on his
claims. To that end,
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Horizon/CMS intends to contest this litigation vigorously. Because the lawsuit
just began, the Company cannot now predict the outcome of this litigation; the
length of time it will take to resolve this litigation; or the effect of any
such outcome on Horizon/CMS's financial condition or results of operations.
In MATTHEW BERENDA, SR., PATRICIA B. BERENDA, MATTHEW BERENDA, JR.,
ELWOOD KISMER, MICHAEL HANSON, TOM RICHTER AND MARK GAYNOR VS. ROCCO A.
ORTENZIO, NEAL M. ELLIOTT, ROBERT A. ORTENZIO, RUSSELL L. CARSON, KLEMMET L.
BELT, JR., ERNEST A. SCHOFIELD, AND HORIZON/CMS HEALTHCARE CORPORATION, No.
CIV 96-0634-BB, filed in the New Mexico Federal District Court, the
plaintiffs, current or former stockholders of the Company, seek to bring this
lawsuit on behalf of all persons who purchased common of stock of Horizon/CMS
between July 6, 1995 and March 15, 1996 (the "Berenda Class Period"). In this
lawsuit, the plaintiffs allege violations of federal and New Mexico state
securities laws. In this connection, the plaintiffs allege that during the
Berenda Class Period, the named defendants disseminated materially misleading
statements about the Company, its business, its Greenery Rehabilitation
Group, Inc. ("Greenery") and CMS acquisitions, Greenery's improved operations
after the acquisition, the successful integration of CMS's operations with
the Company's and the cost savings and operating efficiencies obtained
thereby, Horizon/CMS's earnings growth and financial statements, the
Company's ability to continue to achieve profitable growth and the status and
magnitude of regulatory investigations into and audits of the Company.
Horizon/CMS disputes the factual and legal premises upon which the
plaintiff's lawsuit is based and denies that the plaintiffs are entitled to
any recovery on their claims. To that end, Horizon/CMS intends to contest
this litigation vigorously. Because the lawsuit just began, the Company
cannot now predict the outcome of this litigation; the length of time it
will take to resolve this litigation; or the effect of any such outcome on
Horizon/CMS's financial condition or results of operations.
On May 9, 1996, Horizon/CMS was served with lawsuit styled ALEXANDER
WEINGARTEN AND GEORGE ORBAN, SR. V. HORIZON/CMS HEALTHCARE CORPORATION,
HORIZON HEALTHCARE CORPORATION, NEAL M. ELLIOTT, KLEMETT L. BELT, JR.,
EARNEST A. SCHOFIELD, ROCCO A. ORTENZIO, ROBERT A. ORTENZIO, LEROY ZIMMERMAN,
RUSSELL L. CARSON, AND BRIAN C. CRESSEY, No. CIV 96-0610-MV, filed in the New
Mexico Federal District Court. The plaintiffs issued their own press release
announcing the filing of this case. In this case, the plaintiffs, are former
stockholders of CMS and seek to certify a class of former stockholders of CMS
and allege violations of the federal securities laws. In this connection, the
plaintiffs allege, among other things, that the joint proxy statement/
prospectus issued in respect of the then pending merger transaction
between Horizon/CMS and CMS contained materially false statements in that
such joint proxy statement/prospectus failed to disclose the existence of the
investigation into certain of the Company Medicare billing practices.
Horizon/CMS disputes the factual and legal premises upon which the
plaintiffs' lawsuit is based and denies that the plaintiffs are entitled to
any recovery on their claims. To that end, Horizon/CMS intends to contest
this litigation vigorously. Because the lawsuit just began, the Company
cannot now predict the outcome of this litigation; the length of time it will
take to resolve this litigation; or the effect of any such outcome on
Horizon/CMS's financial condition or results of operations.
In addition, on May 17, 1996, Horizon/CMS announced in a press release
that on May 15, 1996 it was served with four additional stockholders'
derivative lawsuits filed in the Court of Chancery of the State of Delaware
(the "Delaware Chancery Court"). These lawsuits seek to certify a class
substantially identical to the stockholders' derivative lawsuits previously
announced by the Company and seek substantially the same relief.
In ROBERT I. GANELESS, TRUSTEE OF THE GANELESS PENSION TRUST AND
RETIREMENT TRUST VS. KLEMETT L. BELT, JR., RUSSELL L. CARSON, BRYAN C.
CRESSEY, NEAL M. ELLIOTT, CHARLES H. GONZALES, MICHAEL A. JEFFRIES, GERALD M.
MARTIN, FRANK M. MCCORD, RAYMOND N. NOVECK, ROBERT A. ORTENZIO, ROCCO A.
ORTENZIO, BARRY M. PORTNOY, LEROY S. ZIMMERMAN AND HORIZON/CMS HEALTHCARE
CORPORATION, Civil Action No. 14985, filed in the Delaware Chancery Court,
the plaintiff alleges, among other things, that Horizon/CMS's current and
former directors breached their fiduciary duties to the Company and the
stockholders as a result of the purported misuse of inside information in
connection with the sale of Horizon/CMS common stock by certain of the
current and former directors in January and February 1996. To that end, the
plaintiff seeks an accounting from the directors for profits to themselves and
damages suffered by Horizon as a result of the transaction complained of in
the complaint and attorneys' fees and costs. Because the Company was just
served, the Company is now reviewing its options and cannot now comment on
the outcome or the effect of this litigation or the length of time it will
take to resolve this litigation.
In WOODROW WATFORD VS. NEAL M. ELLIOTT, ROCCO A. ORTENZIO, ROBERT A.
ZIMMERMAN, LEROY S. ZIMMERMAN, MICHAEL A. JEFFRIES, GERARD M. MARTIN, RAYMOND
N. NOVECK, RUSSELL L. CARSON, BRYAN C. CRESSEY, FRANK M. MCCORD, KLEMETT L.
BELT, JR., CHARLES H. GONZALES, BARRY M. PORTNOY AND HORIZON/CMS HEALTHCARE
CORPORATION, Civil Action No. 14978, filed in the Delaware Chancery Court, the
plaintiff alleges, among other things, that Horizon/CMS's current and former
directors breached their fiduciary duties to the Company and the stockholders
as a result of the (i) the purported failure to supervise adequately and the
purported knowing mismanagement of the operations of the Company, and the (ii)
purported misuse of inside information in connection with the sale of
Horizon/CMS common stock by certain of the current and former directors in
January and February 1996. To that end, the plaintiff seeks an accounting from
the directors for profits to themselves and damages suffered by Horizon as a
result of the transaction complained of in the complaint and attorneys' fees
and costs. Because the Company was just served, the Company is now reviewing
its options and cannot now comment on the outcome or the effect of this
litigation or the length of time it will take to resolve this litigation.
In ASHER ABRAMOWITZ VS. NEAL M. ELLIOTT, KLEMETT L. BELT, JR., ROCCO A.
ORTENZIO, ROBERT A. ORTENZIO, RUSSELL L. CARSON, BRYAN C. CRESSEY, CHARLES H.
GONZALES, GERARD M. MARTIN, MICHAEL A. JEFFRIES, FRANK M. MCCORD, RAYMOND N.
NOVECK, BARRY M. PORTNOY, LEROY S. ZIMMERMAN AND HORIZON/CMS HEALTHCARE
CORPORATION, Civil Action No. 14989, filed in the Delaware Chancery Court,
the plaintiff alleges, among other things, that Horizon/CMS's current and
former directors breached their fiduciary duties to the Company and the
stockholders as a result of the purported misuse of inside information in
connection with the sale of Horizon/CMS common stock by certain of the
current and former directors in January and February 1996. To that end, the
plaintiff seeks an accounting from the directors for profits to themselves and
damages suffered by Horizon as a result of the transaction complained of in
the complaint and attorneys' fees and costs. Because the Company was just
served, the Company is now reviewing its options and cannot now comment on
the outcome or the effect of this litigation or the length of time it will
take to resolve this litigation.
In DR. HENRI PARENS VS. NEAL M. ELLIOTT, ROCCO A. ORTENZIO, ROBERT A.
ORTENZIO, LEROY S. ZIMMERMAN, MICHAEL A. JEFFRIES, GERARD M. MARTIN, RAYMOND
N. NOVECK, RUSSELL L. CARSON, BRYAN C. CRESSEY, FRANK M. MCCORD, KLEMETT L.
BELT, JR., CHARLES H. GONZALES, BARRY M. PORTNOY, AND HORIZON/CMS HEALTHCARE
CORPORATION, Civil Action No. 14990, filed in the Delaware Chancery Court,
the plaintiff seeks class certification and alleges, among other things, that
Horizon/CMS's current and former directors breached their fiduciary duties to
the Company and the stockholders as a result of the (i) the purported failure
to supervise adequately and the purported knowing mismanagement of the
operations of the Company, and the (ii) purported misuse of inside
information in connection with the sale of Horizon/CMS common stock by
certain of the current and former directors in January and February 1996. To
that end, the plaintiff seeks an accounting from the directors for profits to
themselves and damages suffered by Horizon as a result of the such alleged
actions and attorneys' fees and costs. Because the Company was just served,
the Company is reviewing its options and cannot now comment on the outcome or
the effect of this litigation or the length of time it will take to resolve
this litigation.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Current Report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Horizon/CMS Healthcare Corporation
By: /s/ SCOT SAUDER
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Scot Sauder
VICE PRESIDENT OF LEGAL AFFAIRS, SECRETARY
AND GENERAL COUNSEL
Date: May 20, 1996.
