2.2.0.7 false Commitments and Contingencies 0216 - Disclosure - Commitments and Contingencies true false false false 1 USD false false USD Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 USDEPS Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares xbrli 0 Shares Standard http://www.xbrl.org/2003/instance shares xbrli 0 $ 2 Commitments and Contingencies [Abstract] 0 hrc_CommitmentsAndContingenciesAbstract hrc false na duration Commitments and Contingencies. false false false false false true false false false false false false 1 false false false false 0 0 false false false xbrli:stringItemType string Commitments and Contingencies. false 3 Commitments and Contingencies 1 us-gaap_CommitmentsAndContingenciesDisclosureTextBlock us-gaap true na duration No definition available. false false false false false false false false false false false verboselabel false 1 false false false false 0 0   <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>16. Commitments and Contingencies</b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><u>Batesville Casket Antitrust Litigation</u> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">In 2005 the Funeral Consumers Alliance, Inc. (“FCA”) and a number of individual consumer casket purchasers filed a purported class action antitrust lawsuit on behalf of certain consumer purchasers of Batesville<sup style="font-size: 85%; vertical-align: text-top">®</sup> caskets against the Company and its former subsidiary, Batesville Casket Company, Inc. (“Batesville”) (now wholly-owned by Hillenbrand, Inc., an unaffiliated company), and three national funeral home businesses (the “FCA Action”). We and Hillenbrand, Inc. have entered into a judgment sharing agreement that apportions the costs and any potential liabilities associated with this litigation between us and Hillenbrand, Inc. See Note 3 in our 2009 Form 10-K for more information regarding the judgment sharing agreement. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">The FCA plaintiffs sought certification of a class including all United States consumers who purchased Batesville caskets from any of the funeral home co-defendants at any time during the longest period permitted by the applicable statute of limitations. A similar purported antitrust class action lawsuit was later filed by Pioneer Valley Casket Co. and several so-called “independent casket distributors” on behalf of casket sellers who were unaffiliated with any licensed funeral home (the “Pioneer Valley Action”). On March 26, 2009, the District Judge denied class certification in both cases. On April 9, 2009, the plaintiffs in the FCA case filed a petition with the United States Court of Appeals for the Fifth Circuit for leave to file an appeal of the Court’s order denying class certification. On June 19, 2009 a three-judge panel of the Fifth Circuit denied the FCA plaintiffs’ petition. The FCA plaintiffs filed a request for reconsideration of the denial of their petition and on July 29, 2009, a three judge panel of the Fifth Circuit denied the FCA plaintiffs’ motion for reconsideration and their alternative motion for leave to file a petition for rehearing by all of the judges sitting on the Fifth Circuit Court of Appeals. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">The Pioneer Valley plaintiffs did not appeal the District Court’s order denying class certification, and on April 29, 2009, pursuant to a stipulation among the parties, the District Court dismissed the Pioneer Valley Action with prejudice (that is, Pioneer Valley cannot appeal or otherwise reinstate the case). Neither the Company nor Batesville provided any payment of consideration for the plaintiffs to dismiss this case, other than agreeing to bear their own costs, rather than pursuing plaintiffs for costs. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">Plaintiffs in the FCA Action have generally sought monetary damages on behalf of a class, trebling of any such damages that may be awarded, recovery of attorneys’ fees and costs, and injunctive relief. Plaintiffs in the FCA Action filed a report indicating that they were seeking damages ranging from approximately $947.0 million to approximately $1.46 billion before trebling on behalf of the purported class of consumers they seek to represent, based on claims of approximately one million casket purchases by the purported class members. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">Because Batesville continues to adhere to its long-standing policy of selling Batesville<sup style="font-size: 85%; vertical-align: text-top">®</sup> caskets only to licensed funeral homes, a policy that it continues to believe is appropriate and lawful, if a class were ultimately certified and the case was to go to trial, plaintiffs are likely to claim additional alleged damages for the period between their report and the time of trial. At this point, it is not possible to estimate the amount of any additional alleged damage claims that they might make. We and Batesville will vigorously contest both liability and plaintiffs’ damages theories. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">Despite the July 29, 2009 ruling denying class certification, the FCA plaintiffs have indicated that they intend to pursue their individual injunctive and damages claims. Their individual damages claims are limited to the alleged overcharges on the plaintiffs’ individual casket purchases (the complaint currently alleges a total of ten casket purchases by the individual plaintiffs), which would be trebled, plus reasonable attorneys fees and costs. The District Court issued an order stating that no summary judgment motions would be entertained. The trial of the FCA plaintiffs’ remaining individual claims may begin as early as late summer 2010. In June 2010, co-defendant Stewart Industries settled with the plaintiffs for an amount that may effectively extinguish any of the plaintiffs’ claims for damages against the remaining defendants. The plaintiffs indicate that they intend to proceed with the case to seek attorneys’ fees and injunctive relief. The remaining defendants intend to vigorously oppose this effort based on the plaintiffs’ lack of damages and because the plaintiffs lack standing to seek injunctive relief against any remaining defendants, particularly Hill-Rom, who is not in the casket industry. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">After the district court renders a final judgment as to the individual claims, the FCA plaintiffs may file an appeal, which could include an appeal of the District Court’s order denying class certification. If they succeeded in reversing the district court order denying class certification and a class is certified in the FCA Action filed against Hill-Rom and Batesville and if the plaintiffs prevail at a trial of the class action, the damages awarded to the plaintiffs, which would be trebled as a matter of law, could have a significant material adverse effect on our results of operations, financial condition and/or liquidity. In antitrust actions such as the FCA Action the plaintiffs may elect to enforce any judgment against any or all of the co-defendants, who have no statutory contribution rights against each other. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><u>Related Civil Investigative Demands</u> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">After the FCA Action was filed, in the summer and fall of 2005, we and Batesville were served with Civil Investigative Demands by the Attorney General of Maryland and certain other state attorneys general who had begun an investigation of possible anticompetitive practices in the death care industry relating to a range of funeral services and products, including caskets. We fully cooperated with the attorneys general. We have been informed by the Maryland and Florida Attorneys General offices, which were leading this investigation, that the investigation has been concluded. No claims were filed against us or Batesville as a result of this investigation. The Maryland Attorney General reserved the right to re-open the investigation and to take any further action in the future as the public interest may require. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><u>Office of Inspector General Investigation</u> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">On February 8, 2008, we were served with an Administrative Investigative Demand subpoena by the United States Attorney’s Office for the Eastern District of Tennessee pursuant to a Health and Human Services’ Office of Inspector General investigation. The investigation was described as focusing on “claims for payment for certain durable medical equipment, including specialized support beds.” On September 18, 2008, we were informed by the United States Attorney’s Office that the investigation was precipitated by the filing in 2005 of a qui tam “whistleblower” complaint. A qui tam action is a civil lawsuit brought by an individual on behalf of the government under the False Claims Act. Once the complaint is filed with the court under seal, the Department of Justice investigates the allegations and has the right to intervene and in effect take over the prosecution of the lawsuit if it believes the allegations warrant. This particular complaint was filed in the United States District Court for the Eastern District of Tennessee. Although the complaint has been only partially unsealed at this point, we know that the plaintiffs seek recovery of unspecified damages and civil penalties relating to the alleged submission of false and fraudulent claims to Medicare and/or Medicaid for the provision of durable medical equipment. At this point, the government has not yet reached an intervention decision and is continuing its investigation. We have not yet been formally served in this case, nor has the entire complaint been unsealed. In the event that this matter were to proceed to litigation, if it were found that we had failed to comply with applicable laws and regulations, we could be subject to substantial fines or penalties and possible exclusion from participation in federal health care programs. We are continuing to cooperate with the government’s investigation. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><u>Freedom Medical Antitrust Litigation</u> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">On October 19, 2009, Freedom Medical, Inc. filed a complaint alleging federal antitrust claims and claims under Texas antitrust and common law against the Company, another supplier and two group purchasing organizations (“GPOs”) under the caption Freedom Medical, Inc. v. Hill-Rom Company, Inc. et al (Civil Action No. 5:09cv152, United States District Court, Eastern District of Texas). Freedom Medical alleges that the GPOs’ contracts with the Company and the other supplier excluded Freedom Medical from the biomedical equipment rental market and maintained the Company’s market share in violation of state and federal antitrust laws. Freedom Medical, in fact, has a contract with one of the GPOs. Since the filing of the complaint, Freedom Medical has dismissed that GPO as a defendant, pursuant to a settlement agreement. The plaintiff also has asserted claims for business disparagement, common law conspiracy and tortuous interference with business relationships. The plaintiff seeks injunctive relief and money damages in an unspecified amount. We intend to defend this matter vigorously. Because the litigation is in a preliminary stage, we cannot assess the likelihood of an adverse outcome or determine an estimate, or a range of estimates, of potential damages. We cannot give any assurances that this matter will not have a material adverse impact on the Company’s financial condition, results of operations or cash flows. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><u>Antitrust Settlement</u> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">In fiscal 2005, we entered into a definitive, court approved agreement with Spartanburg Regional Healthcare Systems and its attorneys to settle a purported antitrust class action lawsuit. The settlement resolved all of the claims of class members that did not opt out of the settlement, including the claims of all United States and Canadian purchasers or renters of Hill-Rom<sup style="font-size: 85%; vertical-align: text-top">®</sup> products from 1990 through February 2, 2006 related to or arising out of the subject matter of the lawsuit, and the claims that may have resulted from the current or future effects of conduct or events occurring through February 2, 2006. The original settlement amount of $337.5 million was reduced by almost $21.2 million, to $316.3 million, reflecting the portion attributable to customers who opted out of the settlement. Opt-outs from the settlement account for roughly six percent of the total United States and Canadian revenue during the class period, and over 99 percent of that figure is attributable to the United States government’s decision to opt out of the settlement. We believe we have meritorious defenses against any claims the United States government may choose to make, due to, among other reasons, pricing practices of government purchases that are different than the pricing practices primarily at issue in the lawsuit. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">In connection with our assessment that it was probable that a settlement would be reached and finally approved by the Court during fiscal 2006, we recorded a litigation charge and established a litigation accrual in the amount of $358.6 million in the fourth quarter of fiscal 2005, which included certain legal and other costs associated with the proposed settlement. The Court entered the Order and Final Judgment in the third quarter of fiscal 2006, and we paid a total $316.3 million of the settlement amounts into escrow during that year. As of June 30, 2010 we have retained a $21.2 million litigation accrual associated with the opt-outs. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><u>General</u> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">We are subject to various other claims and contingencies arising out of the normal course of business, including those relating to governmental investigations and proceedings, commercial transactions, product liability, employee related matters, antitrust, safety, health, taxes, environmental and other matters. Litigation is subject to many uncertainties and the outcome of individual litigated matters is not predictable with assurance. It is possible that some litigation matters for which reserves have not been established could be decided unfavorably to us, and that any such unfavorable decisions could have a material adverse effect on our financial condition, results of operations and cash flows. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">We are also involved in other possible claims and are generally self-insured up to certain limits for product/general liability, workers’ compensation, auto liability and professional liability insurance programs. These policies have deductibles and self-insured retentions ranging from $150 thousand to $1.5 million per occurrence, depending upon the type of coverage and policy period. We are also generally self-insured up to certain stop-loss limits for certain employee health benefits, including medical, drug and dental. Our policy is to estimate reserves based upon a number of factors including known claims, estimated incurred but not reported claims and outside actuarial analysis, which are based on historical information along with certain assumptions about future events. </div> </div>  <!-- Begin Block Tagged Note false false false us-types:textBlockItemType textblock Includes disclosure of commitments and contingencies. This element may be used as a single block of text to encapsulate the entire disclosure including data and tables. Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name FASB Interpretation (FIN) -Number 14 -Paragraph 3 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 5 -Paragraph 9, 10, 11, 12 false 1 2 false UnKnown UnKnown UnKnown false true