Regency Health Services Inc.: The Tustin health...

Regency Health Services Inc.: The Tustin health care provider has agreed to pay $9 million to settle a lawsuit by shareholders. Regency will pay a pretax charge of $3.1 million from its second-quarter earnings, and its insurers will pay the bulk of the settlement. The investors filed suit last July after the price of the company’s stock fell 38% in the wake of Regency’s announcement that its earnings for the year would be far less than earlier forecasts.

Company officials have said that Regency’s acquisition of another nursing home operator, Care Enterprises of Tustin, in April, 1994, caused operating control problems, leading to the disappointing fiscal performance. The company declared about $10 million in unexpected charges following the acquisition. Neither Regency nor the plaintiffs admitted any wrongdoing or liability, the company said. Regency operates 94 nursing homes in California, Ohio, New Mexico and West Virginia and offers a variety of other health services.