HCA subpoenaed over Sen. Frist's shares

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HCA subpoenaed over Sen. Frist's shares

By Jeremy Pelofsky

A federal investigation into Senate Majority Leader Bill Frist's sale of HCA Inc. (NYSE:HCA - news) stock widened on Friday when the largest U.S. hospital chain said federal prosecutors had subpoenaed the company for related documents.

Frist, a Tennessee Republican and a potential 2008 presidential candidate, has come under fire for sale of his stock in the company shortly before HCA warned that earnings would miss expectations.

The sale has also drawn the attention of the Securities and Exchange Commission, which has sought information from Frist. His spokesman has denied Frist had any inside information when he initiated the sale.

The lawmaker on June 13 requested the sale of all of his remaining stock in HCA, which was held in blind trusts, his spokeswoman Amy Call said. By July 8 the shares held for himself, his wife, and children were sold by trustees, the spokeswoman added.

Frist had no control over the timing of the sale, the spokeswoman said.

On July 13, HCA warned that second-quarter operating earnings were likely to fall short of analysts estimates, sending its shares tumbling 8.85 percent.

HCA, which Frist's father and brother helped found, said in brief statement that it had received a subpoena from the U.S. Attorney for the Southern District of New York for the production of documents.

"The company believes the subpoena relates to the sale of HCA stock by Senator William H. Frist," HCA said, adding that it would fully cooperate with the matter.

A spokesman for the SEC, which routinely investigates potentially suspicious stock trades before major company news, declined comment.

"Senator Frist had no information about the company or its performance that was not available to the public when he directed the trustees to sell the HCA stock," Frist spokesman Bob Stevenson said in a statement issued on Thursday.

"His only objective in selling the stock was to eliminate the appearance of a conflict of interest," Stevenson said. "The majority leader will provide the SEC any information that it needs with respect to this matter."

HCA and other hospital operators have been hurt by high levels of unpaid patient bills and lackluster admissions.

Shares of HCA were up 84 cents, or 1.8 percent, to $46.74 in morning trading on the New York Stock Exchange.

(Additional reporting by Julie Steenhuysen in Chicago)