Senator Bill Frist's Family Hospital Chain Under Investigation by the SEC

The Securities and Exchange Commission has announced that it is investigating HCA Inc., the for-profit hospital chain started by Senator Bill Frist and his family. The company was founded by Frist's father and brother. The SEC and federal prosecutors are also investigating Senator Frist's sale of stock in the company.

HCA said it would cooperate with the investigation.

Documents show that while HCA insiders were selling millions of dollars of their own stock this year, they were also painting an upbeat picture of the company's outlook for investors.

According to published reports, Senator Frist sold his stock on June 13 and one day later, HCA officers spoke optimistically about the company's prospects during a Goldman Sachs health care conference held in Laguna Niguel, California.

Victor Campbell, HCA's senior vice president of corporate communications and government relations, soothed investor concerns about unpaid patient debts and worries about patient volumes. Campbell also spoke out in favor of a still-pending Senate bill that would limit the establishment of physician-owned specialty hospitals.

A month prior to making these speeches, Campbell reportedly sold off $12 million worth of HCA stock. Company insiders sold off a total of $112 million in HCA stock in the six months prior to June 15.

In mid-July, it was finally revealed that the company would not meet earnings expectations and the value of the stock fell by nine percent.

Investigators say that Campbell spoke only of positive things about the company's financial situation through mid-June. The only mild blemish he mentioned was the number of uninsured patients who were not paying their bills and he even said that was 'improving.'

Senator Frist said he sold off his shares in the company to avoid the appearance of a conflict of interest. He denied having used any insider information to orchestrate the timing of the sales.

The SEC would not comment further on the investigation.