The woes continue to pile up for West Penn Allegheny Health System, which recently reported not only a sizable quarterly loss but also potential litigation from the U.S. Securities and Exchange Commission, according to the Pittsburgh Tribune-Review.
The SEC initiated the investigation due to a 2008 accounting error that prompted the health system to inflate revenue by $73 million. West Penn Allegheny reported that the SEC intended to bring civil action because the faulty data could have deceived bondholders, which hold $750 million the system's debt, the Tribune-Review noted.
However, the SEC's attention may actually be on system pension plan obligations made in 2009, according to the Pittsburgh Post-Gazette.
The five-member SEC board has to vote to bring a lawsuit. Should it sue, the system is likely to settle quickly because it cannot afford to lose the litigation, Douglas Branson, a University of Pittsburgh business professor, told the Tribune-Review.
Meanwhile, West Penn Allegheny reported a loss of $24.7 million for its first fiscal quarter of 2013, which ends on Sept. 30, according to the article.
Along with potential issues with the SEC, West Penn Allegheny has been embroiled in a contentious episode with insurer Highmark over its on-again, off-again $475 million acquisition.
For more:
- read the Tribune-Review article
- read the Post-Gazette article