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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
_____________________________
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): MARCH 6, 1996
_____________________________
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 incoration or org- Identification No.)
anization)
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.
LITIGATION AGAINST TENET HEALTHCARE CORPORATION
Horizon/CMS Healthcare Corporation (the "Company") announced in a press
release issued on March 7, 1996, that it filed a lawsuit against Tenet
Healthcare Corporation ("Tenet") in the United States District Court for the
District of Nevada. The Company stated that the lawsuit arises out of an
agreement entered into between the Company and Tenet in connection with the
Company's attempted acquisition of The Hillhaven Corporation ("Hillhaven") in
January 1995.
In the lawsuit, the Company alleges that, despite having enjoyed over
$171 million in pre-tax gain for its stock interest in Hillhaven as a result
of the Company's efforts, Tenet has failed to honor its commitment to pay the
Company approximately $14.5 million pursuant to the agreement. Tenet has
contended that the amount owing to the Company under the agreement is
approximately $5.1 million. The Company has recognized as income
approximately $13 million of the nearly $14.5 million the Company contends is
owing under the agreement.
OIG/DOJ INVESTIGATION INVOLVING CERTAIN MEDICARE PART B AND RELATED
CO-INSURANCE BILLINGS
The Company announced on March 15, 1996 in a press release that certain
Medicare Part B and related co-insurance billings previously submitted by the
Company are being reviewed by the Office of Inspector General of the
Department of Health and Human Services (the "OIG") and the Department of
Justice (the "DOJ"). These billings, totalling approximately $3.4 million,
sought recovery for the costs of certain Medicare Part B-covered medical
supplies used in treating Medicare patients in certain facilities at a time
when those facilities were operated by Greenery Rehabilitation Group, Inc.
("Greenery") before the Company acquired Greenery (the "Greenery
Acquisition"). These costs were not billed at the time incurred but were
billed on a retroactive basis, as permitted under applicable Medicare Part B
rules, after the Greenery Acquisition. Of the $3.4 million billed,
approximately $1.3 million has been remitted to the Company.
The March 15, 1996 announcement further disclosed that the Company has
advised the OIG that it appears that a portion of the billings may not have
been in accordance with applicable Medicare Part B rules. The Company has
advised the OIG and the DOJ that it is cooperating, and will continue to
cooperate, in the investigation and is prepared to remit any overpayment to
the appropriate governmental authority. The Company believes the errors in
these billings were an exception and do not represent a regular pattern or
practice at the Company. Due to the preliminary nature of the OIG/DOJ
investigation, the Company cannot now predict when the OIG/DOJ investigation
will be completed; the ultimate outcome of the OIG/DOJ investigation; or the
effect thereof on The Company's financial condition or results of
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operations. If adversely determined, the OIG/DOJ investigation could result
in the imposition of civil and/or criminal fines or sanctions against the
Company, which could have a material adverse impact on the Company's
financial condition and/or its results of operations.
The March 15, 1996 press release further disclosed that the Company
anticipates at this time recording a charge in its quarter ended February 29,
1996, of approximately $5.1 million, pre-tax, to write off all revenue
associated with Medicare Part B retroactive billings (including all of the
$3.4 million in retroactive Medicare Part B and related co-insurance billings
discussed previously), as well as the related costs of both the Company's
internal investigations and the OIG/DOJ investigation. The effect of this
charge on earnings of the Company for the third quarter ended February 29,
1996, is approximately $.06 per share.
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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: March 21, 1996.
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