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Other Contingencies | 9 Months Ended
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Sep. 30, 2021
Commitments and Contingencies Disclosure [Abstract] |
Other Contingencies | Note 14—Other Contingencies Line of Credit At September 30, 2021, the Company had a $475 million bank line of credit on which to draw for general corporate purposes. Amounts drawn under the line of credit are payable upon demand and generally bear interest at a float rate, based on the Company’s leverage ratio, and starting at LIBOR plus 115 basis points (or if LIBOR becomes unavailable, the higher of the Overnight Bank Funding Rate, plus 50 basis points and the Prime Rate). As of September 30, 2021 and December 31, 2020, there were no borrowings under the line of credit. The line of credit requires the Company to satisfy two financial covenants, with which the Company is in compliance as of September 30, 2021. The line of credit expires on December 21, 2023. At September 30, 2021, the Company also had outstanding $64.9 million in irrevocable standby letters of credit, which relate to payment obligations under the Company’s insurance programs. In connection with the issuance of the letters of credit, the amount available under the line of credit was reduced by $64.9 million to $410.1 million at September 30, 2021. The letters of credit expire on January 4, 2022. Tax Jurisdictions and Matters The Company provides services throughout the continental United States and is subject to numerous state and local taxing jurisdictions. In the ordinary course of business, a jurisdiction may contest the Company’s reporting positions with respect to the application of its tax code to the Company’s services, which could result in additional tax liabilities. The Company has tax matters with various taxing authorities. Because of the uncertainties related to both the probable outcomes and amount of probable assessments due, the Company is unable to make a reasonable estimate of a liability. The Company does not expect the resolution of any of these matters, taken individually or in the aggregate, to have a material adverse effect on the consolidated financial position or results of operations based on the Company’s best estimate of the outcomes of such matters. Legal Proceedings The Company is subject to various claims and legal actions in the ordinary course of business. Some of these matters include payroll and employee-related matters and examinations by governmental agencies. In accordance with FASB ASC 450 – Contingencies (“ASC 450”), as the Company becomes aware of such claims and legal actions, the Company records accruals for any exposures that are probable and estimable. Significant judgment is required in both the determination of probability and the determination as to whether a loss is reasonably estimable. In accordance with ASC 450, the Company does not accrue for contingent losses that, in its judgment, are considered to be reasonably possible but not probable. In the event the Company determines that adverse outcomes of such claims and legal actions are reasonably possible, Management assesses materiality and provides disclosure regarding the matter, including a range of possible loss when the exposure is estimable, as required by ASC 450. As previously disclosed, the Securities and Exchange Commission (the “SEC”) conducted an investigation into the Company’s earnings per share (“EPS”) calculation practices. Following receipt of a letter from the SEC in November 2017 regarding its inquiry into those practices and a subpoena in March 2018, the Company authorized King & Spalding to conduct an internal investigation, under the direction of the Company’s Audit Committee, into matters related to the SEC subpoena. This investigation was completed in March 2019, and the Company continued to cooperate with the SEC’s investigation and document requests after that time. The Company, its former Chief Financial Officer (now current Chief Administrative Officer), and its Controller reached a settlement with the SEC, which was approved by the SEC commissioners and publicly announced on August 24, 2021. The Company and the individuals neither admitted nor denied the findings in the Commission's order, which stated, among other things, that during certain quarters between 2014 and 2015, the Company failed to timely record the financial impact of certain loss contingencies and maintain accurate books, records and sufficient internal account controls. Under the terms of the settlement, the Company paid a $6.0 million civil monetary penalty during the third quarter of 2021. On March 22, 2019, a putative shareholder class action lawsuit was filed against the Company and its Chief Executive Officer in the U.S. District Court for the Eastern District of Pennsylvania, seeking unspecified monetary damages and other relief on behalf of the plaintiff class. The initial complaint, which was filed by a plaintiff purportedly on behalf of all purchasers of the Company’s securities between April 11, 2017 and March 4, 2019 (the “Class Period”), alleges violations of the federal securities laws in connection with the matters related to the Company’s EPS calculation practices. On September 17, 2019, the complaint was amended to, among other things, extend the Class Period to cover the period between April 8, 2014 and March 4, 2019, and to name additional individuals affiliated with the Company as defendants. On March 17, 2021, the parties reached an agreement in principle to settle the action on a class-wide basis. On June 30, 2021, the plaintiff filed an unopposed motion for an order preliminarily approving a proposed class action settlement, preliminarily certifying the settlement class, and approving notice to the settlement class. On September 15, 2021, the Court entered an order preliminarily approving the $16.8 million settlement and providing for notice to settlement class members. Our insurance carriers have agreed to pay the entirety of the settlement amount upon court approval of the settlement. As of March 31, 2021, the associated contingency was included within the “Other accrued expenses” and “Prepaid expenses and other assets” captions on the Company's Consolidated Balance Sheet. Refer to Note 15—Subsequent Events herein for further information. The Company continues to vigorously defend against all active litigation claims asserted. Any of the foregoing matters could result in substantial costs to the Company, divert management’s attention and resources, and adversely affect the Company’s business condition or harm its reputation, regardless of their merit or outcome. In addition, the uncertainty of the pending lawsuits or potential filing of additional lawsuits could lead to more volatility and a reduction in the Company’s stock price. Government RegulationsThe Company’s customers are concentrated in the healthcare industry and are primarily providers of long-term care many of whom have been significantly impacted by COVID-19. For those customers who were impacted, the pandemic has resulted in increased operating costs, reductions in new resident admitants, and reduced census. The revenues of many of the Company’s customers are highly reliant on Medicare, Medicaid and third party payors’ reimbursement funding rates. New legislation or additional changes in existing regulations could directly impact the governmental reimbursement programs in which the customers participate. There have been several enacted and proposed federal and state relief measures as a result of COVID-19 which should provide support for these customers during this pandemic, however, the full benefit of any such programs would not be realized until these programs are fully implemented, government agencies issue applicable regulations or guidance and such relief is provided.

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