The investment group accusing HCA Healthcare of excessive admissions spanning a decade is now calling for the ouster of its audit chairman at its upcoming annual meeting.
Union-linked CtW Investment Group is urging the Nashville-based hospital chain’s shareholders to oppose the April 28 re-election of Charles Holliday Jr., arguing the director and Audit and Compliance Committee chairman has failed to properly oversee admission practices and thus left the company vulnerable to regulatory and litigation risks. CtW shared information last month that claims HCA admits a greater share of Medicare patients who visit its emergency departments than the national average.
CtW’s latest move comes after HCA said it had reviewed the data in October 2020 and remains confident in its compliance with regulatory requirements. HCA, which declined to comment on Friday, said in March it had left voicemails to that effect for the investment group, but Richard Clayton, CtW’s research director, said no one at the firm received them.
HCA’s board also did not offer any follow-up conversation on the subject, Clayton said. Typically in such cases, companies allow the opportunity to engage further with a director or staff member. They also generally perform an in-depth examination into the issues raised and the potential risks, he said.
“We didn’t see the Audit and Compliance Committee do any of that, and we think Charles Holliday bears primary responsibility for that failure,” Clayton said.
CtW works with union-sponsored pension funds with more than $250 billion in assets under management that it says are “substantial” HCA shareholders. The firm went public in March with the analysis performed by SEIU, which estimates the alleged scheme netted HCA excess Medicare payments of $1.1 billion over the past five years alone.
Removing a member of HCA’s board requires votes from owners of more than 50% of HCA’s shares. Clayton admitted it’s a “pretty steep hill to climb” and said he hasn’t yet spoken with shareholders who have agreed to the move.
Major HCA shareholders Vanguard Group and BlackRock declined to say whether they will vote against Holliday’s re-election. Other large shareholders, T. Rowe Price and State Street Corp., did not respond to requests for comment on the subject.
Holliday, the CEO of DuPont for a decade ending in 2008, also serves as chairman of the global oil and gas company Shell. He’s been on HCA’s board since 2016. HCA paid him almost $224,000 in cash and stock awards to serve in the role in 2020.
HCA shareholders will also vote at the April 28 meeting on a proposal to study the feasibility of increasing the impact quality performance has on executive incentive pay. The shareholder behind the proposal says incentive pay is too strongly weighted toward hitting financial goals.
HCA posted $3.8 billion in profit for fiscal 2020, up from $3.5 billion in 2019. Unions are accusing the company of spending too little on safety measures, including supplies and staffing, to boost profit.