IASIS Healthcare Announces Dismissal of Six-Year-Old Qui Tam Action

FRANKLIN, Tenn.--(BUSINESS WIRE)-- IASIS Healthcare® LLC (“IASIS”) today announced that the United States District Court for the District of Arizona has dismissed with prejudice relator Jerre Frazier’s qui tam complaint against its parent corporation, IASIS Healthcare Corporation (“IASIS Healthcare”). This is the second time this qui tam case has been dismissed with prejudice by the District Court.

The case dates back six years to March 2005 and became the subject of a subpoena by the Office of the Inspector General in September 2005. In August 2007, the case was unsealed and proceeded as a private lawsuit after the Department of Justice did not elect to intervene. On March 31, 2008, United States District Judge James A. Teilborg issued a written order dismissing the case with prejudice and denying as moot IASIS Healthcare’s motions concerning attorney Frazier’s misappropriation and misuse of information subject to a claim of attorney-client privilege by IASIS Healthcare. After appeal by both parties, the United States Court of Appeals for the Ninth Circuit ruled in August 2010 that, while it agreed with the District Court’s finding that Frazier had failed to plead an actionable claim against IASIS Healthcare, the District Court should have given Frazier another chance to amend his complaint. The Court of Appeals also found that the District Court erred in denying as moot IASIS Healthcare’s motions concerning Frazier’s misappropriation and misuse of attorney-client privileged information.

On remand, the case was assigned to United States District Judge Robert Clive Jones. In October 2010, Frazier filed a motion to transfer this action to the United States District Court for the Eastern District of Texas and, in November 2010, filed a Third Amended Complaint. In January 2011, IASIS Healthcare filed its renewed motion for sanctions concerning Frazier’s misappropriation and misuse of privileged documents and filed a motion to dismiss Frazier’s Third Amended Complaint. On May 4, 2011, the District Court in Arizona heard oral argument on all pending motions.

On June 1, 2011, Judge Jones issued a written order dismissing Frazier’s Third Amended Complaint with prejudice. The order also denied Frazier’s motion to transfer the case to the Eastern District of Texas, finding that Frazier “is attempting to engage in forum shopping,” and denied Frazier’s request for leave to further amend his complaint. The Court also expressly reserved decision on the collateral issue of sanctions against Frazier and, preliminary to further briefing on IASIS Healthcare’s pending motion for sanctions, directed Frazier to return to IASIS Healthcare within 20 days all documents withheld by him.

While the order is appealable, the Court’s order in favor of IASIS Healthcare should effectively bring to an end Frazier’s qui tam litigation in the District Court that has been pending since March 2005. IASIS Healthcare intends to continue its vigorous pursuit of sanctions and other remedies against attorney Jerre Frazier related to Frazier’s misappropriation and misuse of information subject to a claim of attorney-client privilege by IASIS Healthcare.

IASIS, located in Franklin, Tennessee, is a leading owner and operator of medium-sized acute care hospitals in high-growth urban and suburban markets. The Company operates its hospitals with a strong community focus by offering and developing healthcare services targeted to the needs of the markets it serves, promoting strong relationships with physicians and working with local managed care plans. IASIS owns or leases 18 acute care hospital facilities and one behavioral health hospital facility with a total of 4,362 licensed beds and has total annual net revenue of approximately $2.8 billion. These hospital facilities are located in seven regions: Salt Lake City, Utah; Phoenix, Arizona; Tampa-St. Petersburg, Florida; five cities in Texas, including Houston and San Antonio; Las Vegas, Nevada; West Monroe, Louisiana; and Woodland Park, Colorado. IASIS also owns and operates a Medicaid and Medicare managed health plan in Phoenix that serves more than 195,000 members. For more information on IASIS, please visit the Company’s Web site at www.iasishealthcare.com.

Some of the statements we make in this press release are forward-looking within the meaning of the federal securities laws, which are intended to be covered by the safe harbors created thereby. Those forward-looking statements include all statements that are not historical statements of fact and those regarding our intent, belief or expectations including, but not limited to, future financial and operating results, the Company’s plans, objectives, expectations and other statements that are not historical facts. Forward-looking statements involve known and unknown risks and uncertainties that may cause actual results in future periods to differ materially from those anticipated in the forward-looking statements. These risk factors and uncertainties are more fully described in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2010, and other filings with the Securities and Exchange Commission.

Although we believe that the assumptions underlying the forward-looking statements contained in this press release are reasonable, any of these assumptions could prove to be inaccurate, and, therefore, there can be no assurance that the forward-looking statements included in this press release will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, you should not regard the inclusion of such information as a representation by the Company or any other person that our objectives and plans will be achieved. We undertake no obligation to publicly release any revisions to any forward-looking statements contained herein to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events.


IASIS Healthcare LLC
Investor Contact:
W. Carl Whitmer, 615-844-2747
President & Chief Executive Officer
John M. Doyle, 615-844-2747
Chief Financial Officer
Media Contact:
Michele M. Peden, 615-467-1255
VP, Corporate Communications

KEYWORDS:   United States  North America  Tennessee

INDUSTRY KEYWORDS:   Health  Hospitals