Hospitals Settle for Failure to Disclose

HFA Partners  |  September 8, 2016

The SEC recently announced settlements with 71 municipal issuers for continuing disclosure violations uncovered by the agency's MCDC initiative launched in 2014. Four healthcare providers were on the list and more are expected in the coming months.


In August, the SEC announced settlements with 71 municipal issuers and obligors for various continuing disclosure violations uncovered by the Municipalities Continuing Disclosure Cooperation (MCDC) initiative launched in 2014.

Four healthcare providers were on the August list, some for relatively minor violations:

  • Lawrence & Memorial Corp. and Lawrence Memorial Hospital (CT): in a 2011 offering statement, Lawrence failed to disclose that its financial statements and operating data were filed late for fiscal 2008 through 2010, some by as much as 4 years.

  • Ascension Health Alliance (MO): Ascension failed to file notices of defeasance as required under 15c2-12, which led to $25 million of bonds potentially underpricing in the markets for up to 2 years.

  • Westchester County Health Care Corporation (dba Westchester Medical Center, NY): in a 2011 official statement, Westchester failed to disclose that certain operating data was not filed for the prior 3 years and that its 2006 audited financial statements were filed 4 years late.

  • Carilion Clinic (VA): in a 2012 official statement, Carilion failed to disclose it did not file interim financial information for the second quarter of fiscal 2011 and operating data for fiscal 2010 and the second quarter of fiscal 2011.

As promised when the SEC launched MCDC, the settlements do not involve monetary penalties.

Instead, the hospitals must establish appropriate written policies, procedures, training, and must designate an individual within each organization to be responsible for future compliance.

Hospitals must also remediate any outstanding deficiencies within 180 days and disclose the settlement in future official statements for the next five years.



This material is intended for general information purposes only and does not constitute legal advice. For legal issues, readers should consult legal counsel. To discuss this article or municipal advisory services, email info@hfapartners.com or call 888-699-4830. HFA Partners, LLC is an Independent Registered Municipal Advisor registered with the Securities and Exchange Commission (SEC) and the Municipal Securities Rulemaking Board (MSRB) under the Dodd-Frank Act of 2010.
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