Tenet Healthcare, which is struggling against a takeover bid by Community Health Systems, has filed a lawsuit saying that the rival hospital chain overbilled Medicare by almost $1 billion over three years.

Though Franklin-based Community Health is pretty determined to stick to its stance of buying Tenet but this lawsuit by Tenet has caused the stocks of both the companies dip down, further affecting the chares of other hospitals.

Referring to Tenet’s claim as a baseless attempt to distract shareholders, CHS officials said that it had become quite clear that Tenet had adopted a scorched earth defense without giving any thought about the best interests of shareholders.

Tenet has made serious allegations saying that CHS has always been trying to convert emergency room visitors into admitted patients in order to squeeze more money out of the Medicare whereas there was a possibility of keeping all those patients in a less expensive setup.

Sheryl Skolnick, an analyst with CRT Capital in Stamford, Conn., said, “Community Health needs to lift up the curtains and show Wall Street, investors and others how it is able to have observation rates (of patients) much lower than the industry average”.