Why Chemed Shares Were Walloped


Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Chemed , the nation's largest for-profit hospice care provider, nosedived 24% after the company announced the receipt of a false claims action complaint by the U.S. government.

So what: According to the U.S. government complaint filed against Chemed in Western Missouri, since as early as 2002 the company may have submitted false claims to the Medicare program by billing Medicare patients for crisis care services when they weren't eligible, and admitting patients who weren't eligible for the Medicare hospice benefit based on their life expectancy. The lawsuit seeks monetary compensation and interest while Chemed insists it will defend the lawsuit "vigorously."

Now what: Get out the yellow caution tape! Until further notice, I'd consider Chemed completely off limits. Government lawsuits like this often end in settlements long before they go to trial, but any sort of settlement here could be a damaging blow to Chemed's reputation. Until we know more -- and it could be a while -- I feel you ought to stay far away from this murky situation.

Craving more input? Start by adding Chemed to your free and personalized watchlist so you can keep up on the latest news with the company.

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The article Why Chemed Shares Were Walloped originally appeared on Fool.com.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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