Apple’s Cook Calls Hedge Fund Manager’s Lawsuit a ‘Sideshow’

SAN FRANCISCO (Reuters) - Apple Inc Chief Executive Tim Cook said the board is carefully considering David Einhorn's proposal for the company to issue preferred stock and return more cash to investors, but he called a lawsuit brought by the star hedge fund manager against Apple a "silly sideshow."

Waving aside Einhorn's assertion that Apple is clinging to a "Depression-era" mentality, Cook said on Tuesday the board is in "very active discussions" on how to dole out more of its $137 billion hoard of cash and marketable securities.

Einhorn and his Greenlight Capital are suing Apple as part of a wider effort to get the iPhone maker to share more of its cash pile, one of the largest among technology companies. They are challenging "Proposal 2" in Apple's proxy statement, which would abolish a system for issuing preferred stock at its discretion.

The lawsuit, the first major challenge from an activist shareholder in years, calls on Apple to issue perpetual preferred shares that pay dividends to existing shareholders. Such a vehicle, the Einhorn says, would be superior to dividends or share buybacks.

Cook gave Einhorn credit for a novel idea, but the usually unflappable chief executive turned slightly impatient when discussing the lawsuit. He was also dismissive of Einhorn's media and legal blitz - which included the lawsuit as well as multiple television and media interviews.

"This is a waste of shareholder money and a distraction, and not a seminal issue for Apple. That said, I support Prop 2. I am personally going to vote for it," Cook told a packed hall at Goldman Sachs' annual technology industry conference in San Francisco.

The conflict over Prop 2 "is a silly sideshow," added Cook, who on Tuesday traded in his usual casual jeans attire for slacks and a dark suit jacket, in a nod to Wall Street. Cook said he thought it "bizarre that we would find ourselves being sued for doing something good for shareholders."

Einhorn's clash with Apple centers on a proposed change to its charter that would eliminate the company's ability to issue "blank check" preferred stock at its discretion. Apple, which said the change would not preclude future issuance of preferred shares, is recommending shareholders vote in favor at its annual meeting on February 27.

The lawsuit, filed in the U.S. district court in Manhattan, objects to the bundling of the charter change with two other corporate governance-related proposals in "Proposal 2."

The hedge fund manager, a well-known short-seller and Apple gadget fan, counters that striking the preferred-share mechanism from the charter would make it more difficult to issue such securities down the road.

Apple's share price has tumbled in recent months from a high of just over $700 last September. In late afternoon trade on Tuesday, the shares were down around 2.2 percent at $469.30.

DIMINISHING CLOUT

Investors were disappointed that Cook - who rarely makes lengthy public-speaking engagements - did not provide a "more substantial" view on returning cash.

"The only thing that would substantially move the stock would be him saying they were returning cash to shareholders or hinting at a new product," said a manager from a mid-size Dallas hedge fund that owns Apple shares.

"There was a small chance of that happening."

Apple stock is a mainstay of many fund managers' portfolios, with research firm eVestment estimating that 75 percent of U.S. large-cap growth managers had invested more than 5 percent of their portfolios in Apple as of the end of the third quarter of 2012.

But that also increases the pressure on Apple to give away a bigger portion of its cash hoard, which is rising as the share price declines and its outlook grows murkier.

Last March, Apple announced a quarterly cash dividend and a share buyback that would pay out $45 billion over three years. At the time, it was sitting on $98 billion in cash. It has so far returned $10 billion of that, but investors want more.

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Report: U.S. recovered $4.2 billion from healthcare fraud in 2012

Federal officials say they recovered nearly $8 for every dollar spent on healthcare fraud investigations in 2012. (Scott Eells / Bloomberg)

By Chad Terhune

February 11, 2013, 9:59 a.m.

Federal officials said they recovered a record-high $4.2 billion related to healthcare fraud and abuse in fiscal year 2012.

U.S. Atty. Eric Holder and Health and Human Services Secretary Kathleen Sebelius said the federal government recovered $7.90 for every dollar spent on healthcare-related fraud and abuse investigations.

The total of $4.2 billion in taxpayer dollars recovered for fiscal year 2012 was up slightly from $4.1 billion a year earlier, officials said. It's estimated that Medicare loses about $60 billion annually to fraud and improper payments.

"We are gaining the upper hand in our fight against healthcare fraud," Sebelius said.

The Obama administration has tried to crack down on Medicare fraud by boosting investigations in certain "hot spots" such as Miami and Los Angeles and using technology to detect schemes sooner.

Last year, Medicare said it began screening all 1.5-million providers enrolled in the government healthcare program to identify ineligible and potentially fraudulent providers or suppliers. As a result, officials said nearly 150,000 ineligible providers were booted from Medicare.

Still, some members of Congress have complained that the Obama administration has been too slow to deploy technology widely used by the credit-card industry to weed out fraud and abuse.

ALSO:

Former L.A. clinic owner makes Medicare's most-wanted list

Cache of Kaiser patient details was kept in family's home

Small surgeries, huge markups

Follow Chad Terhune on Twitter

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Video Exclusive: Makers Help Cartoonist Keep His Kickstarter Promise to Explode

In a moment of Kickstarted exuberance, cartoonist Ryan North made a promise to explode. Makers Derek Quenneville and Lauren Archer made the explosion happen.

The uncut version of the video goes like this: We’re in an alley. A man in black places a blue plastic head on the ground among the snow before putting on safety goggles. “Safety third!” someone shouts. A woman in a hoodie runs up to the head, pours liquid into the hole on top and then screws on a purple cap before running away. Smoke begins pouring out around the cap, which is a problem. She scurries back in, secures the cap completely and then hurries out of frame.

And then nothing.

For seven minutes, the head just sits there. Occasionally, ominous cracking sounds occur, but not much else. People begin to worry that it isn’t working. There’s some discussion about whether someone should approach the head or not. “We’ve made a bomb we can’t turn off,” a man says. “With a fuse of unknown length,” adds a woman. We continue to wait.

“I think your forehead’s getting bigger,” someone else says.

BOOM. The head explodes. Everyone cheers.

It began as a joke.

Ryan North is a cartoonist. He writes Dinosaur Comics, a daily comic where the pictures never change. It’s 10 years old. North was running a Kickstarter for a book he’d written, a chooseable-path adventure book based on Hamlet. (A what? North explains: “‘Chooseable-path’ you may recognize as a trademark-skirting version of a phrase and book series you remember from childhood.  Remember?  Books in which… an adventure is chosen??”)

The base goal was for $20,000 to get the book printed, but as is increasingly common, North included stretch goals to help the project along. At $30,000 he’d hire nine artists to illustrate some of the deaths that occur in a few endings, and give everyone who backed the project an e-book. At $50,000 there would be an illustration for all 110 deaths. At $90,000 a whole new book based on the life of poor Yorick. As the number climbed, the rewards got bigger and weirder. There were new e-books and plush skulls and a stage performance where the internet votes on what happens next. At $225,000, North promised to send a total of 225 free books to schools and libraries. “Also I will… create a pizza that looks like Hamlet and… eat it?”

The $500,000 unlock said simply this: “I will literally explode (literally)”

The Kickstarter closed out at $580,905.

“Honestly when I made the promise, breaking $500,000 seemed really unlikely so I was willing to play fast and loose with what I would have to deliver,” says North, “Saying ‘I will literally explode’ seemed like a fun way to end the paragraph, you know?”

Derek Quenneville and Lauren Archer are makers. They’re both members of the Site 3 coLaboratory, a maker space in Toronto. Quenneville is a 3-D printing evangelist and digital fabrication artist who devotes a lot of his time to helping others learn to use these new tools. Archer is a heritage planner, high-energy craftsperson, and member of the Site 3 board. Quenneville is the man in the video; Archer, the woman.

Quenneville heard North talking about his ‘literally explode’ problem on the radio. “Since Site 3 has some experience with such things, I sent him an e-mail inviting him to be 3-D printed and exploded.”

“It was basically like the Bat signal,” says North, “I expressed my need publicly, and the next thing I know Derek and the rest of Site 3 are swooping in saying ‘Have no fear, citizen! How much fire do you want in the explosion?’”

Site 3 is located in a two-story building in a back alley in Toronto. It was opened in 2010, by a group of makers who’d been involved in other hacker spaces but needed a place where they could generate sawdust and run power tools without messing up someone’s computer.

Today, the site offers a rotating series of workshops, as well as a weekly open house night. There are industrial sewing machines, a laser cutter, 3-D printers, and a variety of soldering, wood- and metal-working tools. “Site 3 is an awesome enabler,” says Archer. “Anything you’ve ever wanted to make or do, but didn’t have the space or tools or the expertise or the confidence to try, you can probably do at Site 3.”

“It’s a very welcoming, friendly space,” says Quenneville.

Site 3 is best known for being the home of a series of pyrotechnic projects like Super Street Fire, where two contestants battle it out by controlling real flames with their minds. “We’re more about fire specifically than explosions, as we have a number of certified flame effects people, fire arts performers, and the like,” says Quenneville.

Fire is a theme that runs through Site 3′s workshop space. The bathroom even features a fire toilet, thanks to a lack of plumbing.

Yet despite all that, the answer to North’s problem turned out to involve no fire at all. “Lauren suggested that an embedded bottle of dry ice would be the safest way to go,” says Quenneville.

How often does Archer blow things up? “Not often enough! Or just often enough. It’s hard to tell,” she says, “I blew up a cake for my boyfriend’s birthday, and wasn’t really planning any more explosions any time soon. But when opportunity knocks!”

The plan was simple: Scan North’s head using a Microsoft Kinect and ReconstructMe to generate a 3-D model. Print that 3-D model in 14 parts so there would be natural seams, and assemble it around a plastic bottle. Fill the plastic bottle with dry ice and then add some water to speed up the reaction. Seal the lid and run away.

Archer says the project took only three or four days of planning. “I like the challenge and gratification of thinking up and implementing an idea really rapidly,” she says. “It limits you to what you can find and to using the resources of the community around you.”

The actual printing was performed on a modified MakerBot Cupcake printer, and took 35 hours.

The process of preparing the explosion was documented on the book’s Kickstarter page, and North’s head is available for download. North says excitement about the explosion from his fans has been high. “Some of them have forgotten there’s a book to go with it.”

If you are one of those fans, this is for you.

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The New Old Age: The Executor's Assistant

I’m serving as executor for my father’s estate, a role few of us are prepared for until we’re playing it, so I was grateful when the mail brought “The American Bar Association Guide to Wills and Estates” — the fourth edition of a handbook the A.B.A. began publishing in 1995.

This is a legal universe, I’m learning, in which every step — even with a small, simple estate that owes no taxes and includes no real estate or trusts — turns out to be at least 30 percent more complicated than expected.

If my dad had been wealthy or owned a business, or if we faced a challenge to his will, I would have turned the whole matter over to an estate lawyer by now. But even then, it would be helpful to know what the lawyer was talking about. The A.B.A. guide would help.

Written with surprising clarity (hey, they’re lawyers), it maps out all kinds of questions and decisions to consider and explains the many ways to leave property to one’s heirs. Updated from the third edition in 2009, the guide not only talks taxes and trusts, but also offers counsel for same-sex couples and unconventional families.

If you want to permit your second husband to live in the family home until he dies, but then guarantee that the house reverts to the children of your first marriage, the guide tells you how a “life estate” works. It explains what is taxable and what isn’t, and discusses how to choose executors and trustees. It lists lots of resources and concludes with an estate-planning checklist.

In general, the A.B.A. intends its guide for the person trying to put his or her affairs in order, more than for family members trying to figure out how to proceed after someone has died. But many of us will play both these parts at some point (and if you are already an executor, or have been, please tell us how that has gone, and mention your state). We’ll need this information.

Editor’s Note: More information about “The American Bar Association Guide to Wills and Estates” can be found here.

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Paula Span is the author of “When the Time Comes: Families With Aging Parents Share Their Struggles and Solutions.”

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Paula Span is the author of “When the Time Comes: Families With Aging Parents Share Their Struggles and Solutions.”

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Euro’s Strength on Agenda for Finance Ministers

BRUSSELS — Concern over the euro moved to the forefront Monday as finance ministers of the countries using the currency held their monthly meeting. But this time, with the European Union’s recession continuing, the topic was the strength of the euro rather than its many weaknesses.

Yves Logghe/Associated Press

Jeroen Dijsselbloem, the president of the Eurogroup, with Christine Lagarde, managing director of the I.M.F. in Brussels on Monday.

As confidence has grown that the Union will be able to manage its sovereign debt crisis, the euro has made significant gains against the dollar and other foreign currencies. That is making Europe’s exports more expensive, a factor that could hamper growth.

On Monday, France, which traditionally favors market intervention, renewed its calls for remedial steps that could include establishing a target level for the euro’s value.

Exchange rates need “to reflect the economic fundamentals of our economies of the euro zone,” said Pierre Moscovici, the French finance minister. “Exchange rates should not become subjected to moods or speculation.”

Mr. Moscovici made the case to other members of the so-called Eurogroup of finance ministers, asking for coordinated action to keep a lid on the value of the euro currency. Before the meeting, Mr. Moscovici said he wanted the Europeans to present a common plan later this week during a meeting of finance ministers and central bankers of the Group of 20 nations to be held in Moscow.

In a news conference after Monday’s meeting, Jeroen Dijsselbloem, the president of the Eurogroup, who oversees the agenda for the monthly meetings, said the euro exhange rate had been discussed. But like some German officials, he appeared to give the matter short shrift, saying that the forum for further discussion should be the G-20 meeting in Moscow.

"That's where exchange rates, if anywhere, should be addressed," Mr. Dijsselbloem said.

Mario Draghi, the president of the European Central Bank, warned last week that the strength of the euro could weigh on the ability of Europe to pull out of its economic doldrums. Those comments were enough to send the euro down sharply against the dollar — to $1.36 from $1.34 — and the yen.

The euro was trading at $1.339 on Monday after falling to the low $1.20s last year.

The renewed French push for greater scope to control the levers of the European economy immediately met stiff resistance from a senior German official, who decried the initiative as a poor substitute for policy overhauls.

Jens Weidmann, the president of the German central bank, the Bundesbank, suggested Monday that countries like France were simply diverting attention from the need to make their economies more competitive.

“Only governments can solve these problems, the central banks cannot,” he added. “In this respect, the discussion about a supposed overvaluation of the euro’s exchange rate simply deviates from the real challenges.”

Mr. Weidmann also warned that an exchange rate policy aimed at weakening the euro would “in the end result in higher inflation.”

A number of ministers agreed Monday that intervention would be wrongheaded.

“This is mainly decided by the market,” Maria Fekter, the Austrian finance minister, said in response to a question on the strong euro as she arrived at the meeting. “I find an artificial weakening unnecessary.”

The strong euro means some European exports, like cars and wine, become more expensive abroad, putting European producers at a disadvantage against foreign competitors. But there are also positive effects. Imports, particularly oil, become less expensive for Europeans, which helps stimulate the economy.

The push for intervention by the French is unlikely to make much real headway. Instead, it may be an illustration of the way that economic policies in the euro area are a result of a back-and-forth between states like France and Germany.

“The French have always believed the single currency should be put to the service of exports,” said Mujtaba Rahman, an analyst with the Eurasia Group, a political risk research and consulting firm. “But it’s not a debate they can win, so they are most likely using this to win concessions on other baby projects, from the pace of its own fiscal consolidation, to a fiscal capacity to a short-term mutualized debt instrument.”

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Ambitious makeover planned for old housing project

Denise Penegar puts a little extra effort into the teenage girls, the ones who've dropped out of high school to care for their firstborns.

Don't be afraid, the outreach worker tells them. Come down to the housing project's community center, get your GED and some job skills. Change your life.

"I was one of those girls," said Penegar, now 51 and still living in Jordan Downs, the Watts housing project where she was born.

Sometimes, she imagines how different her life might have been if someone had knocked on her door when she was 17, caring for her first baby. What would it have meant just to have "someone who is here who can help pick me up"?

Penegar is on the front lines of a bold social experiment underway at Jordan Downs, a project notorious to outsiders for its poverty, blight and violence but seen by many longtime residents, for all its problems, as a close-knit community worth preserving.

In the last year, the Housing Authority of the City of Los Angeles has begun an effort to transform Jordan that could cost more than $600 million. The plan is to turn the complex of 700 aging units into a mixed-income community of up to 1,400 apartments and condominiums, with shops and restaurants and fancy touches such as native plant gardens. The city hopes to draw in hundreds of more-affluent residents willing to pay market rate to live side by side with the city's poorest.

Spurred by changes in federal funding and policy, such "mixed use" developments have sprung up in place of infamous housing projects all over the country. But experts say Jordan is taking an approach that has not been tried on this scale.

Typically, public housing residents are moved out ahead of the bulldozers, scattered to search for new shelter. In Los Angeles, the housing authority has promised that any of the 2,300 Jordan residents "in good standing" can stay in their old units until the day they move into new ones. The project is to be built in phases, beginning with units on 21 acres of adjacent land purchased by the authority in 2008 for $31 million.

To ease the transition, the city has dispatched "community coaches" like Penegar, along with teachers, social workers, therapists — even police officers whose charge is not to make arrests but to coach youth football and triathlon teams.

In essence, officials intend to raze the buildings, not the community — and radically change its character.

It will be an enormous challenge, with success likely to be measured in tiny increments.

Only 47% of adults at Jordan reported any wages to the housing authority last year. As in many urban projects, poverty and social ills have multiplied through the generations, leaving some residents unfamiliar with opportunities and expectations beyond the neighborhood. Some rarely leave the area.

Before inviting in new neighbors with expectations of safety and comfort, the housing authority has begun flooding Jordan Downs with social services. Many of the programs are focused on women, because more than 60% of Jordan Downs' tenants live in households headed by single mothers. But men are targeted too — for job training and lessons in parenting, for instance.

By December, 10 months into the effort, more than 450 families had been surveyed by intake workers and 280 signed up for intensive services.

"Most people would say it's ambitious, but I think it's essential," said Kathryn Icenhower, executive director of Shields for Families, the South Los Angeles nonprofit that is running many of the new programs under a more than $1-million annual contract with the housing authority.

It is unknown, however, how effective the social services will be, how easy it will be to draw in wealthier residents and how many millions of dollars the federal government — a major source of funding — will provide.

Already, the housing authority has picked a development team — the for-profit Michaels Organization and the nonprofit Bridge Housing, both with respectable track records in other cities. But with financing still uncertain, it is unclear exactly how many units will be built or how much various occupants would pay.

Ultimately, a working family could pay hundreds of dollars more in rent than unemployed tenants next door for a nearly identical unit. Officials say they do not expect Watts to draw the same kind of high-income residents as the former Cabrini Green project in Chicago, which sat on prime real estate near downtown. But Jordan is in a convenient location, near the intersection of the 105 and 110 Freeways; and in a high-rent city like Los Angeles, even the steepest rates at Jordan are likely to seem a bargain.

Despite the onslaught of social services and some palpable changes — including a 53% plunge in the violent crime rate at Jordan last year — financial risks abound.

Later this spring, the authority plans to put in an application for $30 million from the federal government's Choice Neighborhoods Program as seed money. Without it, the project could be delayed.

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Wired Science Space Photo of the Day: Wings of the Seagull Nebula

This image shows the intricate structure of part of the Seagull Nebula, known more formally as IC 2177. These wisps of gas and dust are known as Sharpless 2-296 (officially Sh 2-296) and form part of the “wings” of the celestial bird. This region of the sky is a fascinating muddle of intriguing astronomical objects — a mix of dark and glowing red clouds, weaving amongst bright stars. This new view was captured by the Wide Field Imager on the MPG/ESO 2.2-metre telescope at ESO’s La Silla Observatory in Chile.

Image: ESO [high-resolution]

Caption: ESO

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For Families Struggling with Mental Illness, Carolyn Wolf Is a Guide in the Darkness

When a life starts to unravel, where do you turn for help?

Melissa Klump began to slip in the eighth grade. She couldn’t focus in class, and in a moment of despair she swallowed 60 ibuprofen tablets. She was smart, pretty and ill: depression, attention deficit disorder, obsessive-compulsive disorder, either bipolar disorder or borderline personality disorder.

In her 20s, after a more serious suicide attempt, her parents sent her to a residential psychiatric treatment center, and from there to another. It was the treatment of last resort. When she was discharged from the second center last August after slapping another resident, her mother, Elisa Klump, was beside herself.

“I was banging my head against the wall,” the mother said. “What do I do next?” She frantically called support groups, therapy programs, suicide prevention lines, anybody, running down a list of names in a directory of mental health resources. “Finally,” she said, “somebody told me, ‘The person you need to talk to is Carolyn Wolf.’ ”

That call, she said, changed her life and her daughter’s. “Carolyn has given me hope,” she said. “I didn’t know there were people like her out there.”

Carolyn Reinach Wolf is not a psychiatrist or a mental health professional, but a lawyer who has carved out what she says is a unique niche, working with families like the Klumps.

One in 17 American adults suffers from a severe mental illness, and the systems into which they are plunged — hospitals, insurance companies, courts, social services — can be fragmented and overwhelming for families to manage. The recent shootings in Newtown, Conn., and Aurora, Colo., have brought attention to the need for intervention to prevent such extreme acts of violence, which are rare. But for the great majority of families watching their loved ones suffer, and often suffering themselves, the struggle can be boundless, with little guidance along the way.

“If you Google ‘mental health lawyer,’ ” said Ms. Wolf, a partner with Abrams & Fensterman, “I’m kinda the only game in town.”

On a recent afternoon, she described in her Midtown office the range of her practice.

“We have been known to pull people out of crack dens,” she said. “I have chased people around hotels all over the city with the N.Y.P.D. and my team to get them to a hospital. I had a case years ago where the person was on his way back from Europe, and the family was very concerned that he was symptomatic. I had security people meet him at J.F.K.”

Many lawyers work with mentally ill people or their families, but Ron Honberg, the national director of policy and legal affairs for the National Alliance on Mental Illness, said he did not know of another lawyer who did what Ms. Wolf does: providing families with a team of psychiatrists, social workers, case managers, life coaches, security guards and others, and then coordinating their services. It can be a lifeline — for people who can afford it, Mr. Honberg said. “Otherwise, families have to do this on their own,” he said. “It’s a 24-hour, 7-day-a-week job, and for some families it never ends.”

Many of Ms. Wolf’s clients declined to be interviewed for this article, but the few who spoke offered an unusual window on the arcane twists and turns of the mental health care system, even for families with money. Their stories illustrate how fraught and sometimes blind such a journey can be.

One rainy morning last month, Lance Sheena, 29, sat with his mother in the spacious family room of her Long Island home. Mr. Sheena was puffy-eyed and sporadically inattentive; the previous night, at the group home where he has been living since late last summer, another resident had been screaming incoherently and was taken away by the police. His mother, Susan Sheena, eased delicately into the family story.

“I don’t talk to a lot of people because they don’t get it,” Ms. Sheena said. “They mean well, but they don’t get it unless they’ve been through a similar experience. And anytime something comes up, like the shooting in Newtown, right away it goes to the mentally ill. And you think, maybe we shouldn’t be so public about this, because people are going to be afraid of us and Lance. It’s a big concern.”

Her son cut her off. “Are you comparing me to the guy that shot those people?”

“No, I’m saying that anytime there’s a shooting, like in Aurora, that’s when these things come out in the news.”

“Did you really just compare me to that guy?”

“No, I didn’t compare you.”

“Then what did you say?”

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American and US Airways Are Expected to Announce Merger This Week

After months of negotiations, American Airlines and US Airways are expected this week to announce a merger, which would create the nation’s biggest airline and concentrate even further a once-fragmented industry.

A merger would expand American’s domestic network, particularly in the Northeast and the Southwest, and create a more formidable competitor internationally. The combined airline would jump ahead of United Airlines and Delta Air Lines, both of which have grown through mergers of their own in recent years.

The combination would probably bring to an end the wave of consolidation that has swept the industry. Since 2001 there have been five large mergers, reducing the number of airlines to three main carriers, along with a handful of low-cost carriers like Southwest Airlines and JetBlue, and regional carriers.

These mergers have led to cuts in service to many smaller cities around the country. But they have also created healthier and more profitable airlines that are able to invest in new planes and products. Faced with rising fuel costs, and losing tens of billions of dollars in the last decade, airline executives argued that the only way to survive was to consolidate capacity.

American, which has been in bankruptcy protection since November 2011, is currently the nation’s third-largest airline with domestic and international flights; US Airways is the fourth.

The boards of both carriers are expected to meet on Monday to approve the combination, which then needs to be approved by a bankruptcy judge in New York. A tie-up also requires the approval of federal regulators and antitrust authorities. But analysts expect regulators to approve the deal since there is little overlap between the two networks and no hubs in the same cities.

Even if the deal clears all these hurdles, the merged airline still faces a range of challenges. Airline mergers are often rocky — involving complex technological systems, big reservation networks as well as large labor groups with different corporate cultures that all need to be combined seamlessly. United angered passengers last year after a series of merger-related computer and reservation mistakes, and late and delayed flights.

A deal would be a major victory for Doug Parker, the chairman of US Airways, who began pursuing a merger with the bigger carrier soon after American filed for bankruptcy. His argument — that American could succeed against bigger airlines only if it combined networks with US Airways — swayed American’s creditors who have a critical say in the company’s future.

The carriers have been discussing a deal for months. In recent days, both sides have moved much closer but were still trying to figure out how much the merged carrier would be worth and how management positions would be split.

Tom Horton, American’s chairman, who was opposed to a merger for much of the last year, was offered a position as nonexecutive chairman, said a person familiar with the matter but who asked not to be identified because the talks were still under way. US Airways shareholders could end up with about 28 percent of the new airline, and American’s creditors would have 72, this person said.

A merger could be structured to take effect as American exits bankruptcy. The airlines are pushing for a deal before Feb. 15, when some nondisclosure agreements with American bondholders are set to expire.

The new airline will be called American Airlines and based in Dallas. It will have a combined 94,000 employees, 950 planes, 6,500 daily flights, nine major hubs, and total sales of nearly $39 billion. It would be the market leader on the East Coast, the Southwest and South America. But it would remain a smaller player in the Pacific and Europe, where United and Delta are stronger.

Mr. Parker deftly outmaneuvered Mr. Horton by lobbying American’s employees. He gained an important edge last April when he won the public support of American’s three main labor groups. More recently, pilots from both airlines agreed on how they would work together if the merger succeeded.

The success of these labor discussions, even before the merger was formally discussed, helped persuade American’s creditors to follow Mr. Parker’s strategy.

Mr. Horton, and American’s management team, had argued that they should complete the carrier’s reorganization and emerge from bankruptcy as an independent airline before considering any mergers.

But under pressure from Mr. Parker, the management of American Airlines was eventually forced by its creditors to talk to Mr. Parker about a merger. All that was left then was to figure out who was going to lead the merged airline and how much it would be worth.

Mr. Parker, more than anyone in the business, knows the difficulty of integrating two airlines. In 2005, he orchestrated the merger of the airline he was then running, America West, with a larger carrier, US Airways. But pilots from each of these two original airline have yet to agree to a common contract and seniority rules, and, to this day, cannot fly together.

The difficulty is likely to be compounded at American. In bankruptcy, American cut thousands of jobs, reduced benefits, froze pensions, and sought higher productivity rules from its employees.

Before the US Airways-American deal, the last major combination was the acquisition of AirTran by Southwest, completed in 2011. That followed the merger of United and Continental Airlines in 2010, which created the current leader, and before that Delta with Northwest.

American has major hubs in Dallas, Miami, Chicago, Los Angeles and New York. But it has been steadily losing ground to its rivals over the last decade while racking up losses that have totaled more than $12 billion in over 10 years.

US Airways has hubs in Phoenix, Philadelphia and Charlotte, and has a big presence at Washington’s National Airport.

Its shareholders will have to vote on the proposed merger.

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A delicate new balancing act in senior healthcare

When Claire Gordon arrived at Cedars-Sinai Medical Center, nurses knew she needed extra attention.

She was 96, had heart disease and a history of falls. Now she had pneumonia and the flu. A team of Cedars specialists converged on her case to ensure that a bad situation did not turn worse and that she didn't end up with a lengthy, costly hospital stay.

Frail seniors like Gordon account for a disproportionate share of healthcare expenditures because they are frequently hospitalized and often land in intensive care units or are readmitted soon after being released. Now the federal health reform law is driving sweeping changes in how hospitals treat a rapidly growing number of elderly patients.

The U.S. population is aging quickly: People older than 65 are expected to make up nearly 20% of it by 2030. Linda P. Fried, dean of the Columbia University Mailman School of Public Health, said now is the time to train professionals and test efforts to improve care and lower healthcare costs for elderly patients.

"It's incredibly important that we prepare for being in a society where there are a lot of older people," she said. "We have to do this type of experiment right now."

At Cedars-Sinai, where more than half the patients in the medical and surgical wards are 65 or older, one such effort is dubbed the "frailty project." Within 24 hours, nurses assess elderly patients for their risk of complications such as falls, bed sores and delirium. Then a nurse, social worker, pharmacist and physician assess the most vulnerable patients and make an action plan to help them.

The Cedars project stands out nationally because medical professionals are working together to identify high-risk patients at the front end of their hospitalizations to prevent problems at the back end, said Herb Schultz, regional director of the U.S. Department of Health and Human Services.

"For seniors, it is better care, it is high-quality care and it is peace of mind," he said.

The effort and others like it also have the potential to reduce healthcare costs by cutting preventable medical errors and readmissions, Schultz said. The federal law penalizes hospitals for both.

Gordon, an articulate woman with brightly painted fingernails and a sense of humor, arrived at Cedars-Sinai by ambulance on a Monday.

Soon, nurse Jacquelyn Maxton was at her bedside asking a series of questions to check for problems with sleep, diet and confusion. The answers led to Gordon's designation as a frail patient. The next day, the project team huddled down the hall and addressed her risks one by one. Medical staff would treat the flu and pneumonia while at the same time addressing underlying health issues that could extend Gordon's stay and slow her recovery, both in the hospital and after going home.

To reduce the chance of falls, nurses placed a yellow band on her wrist that read "fall risk" and ensured that she didn't get up on her own. To prevent bed sores, they got her up and moving as often as possible. To cut down on confusion, they reminded Gordon frequently where she was and made sure she got uninterrupted sleep. Medical staff also stopped a few unnecessary medications that Gordon had been prescribed before her admission, including a heavy narcotic and a sleeping pill.

"It is really a holistic approach to the patient, not just to the disease that they are in here for," said Glenn D. Braunstein, the hospital's vice president for clinical innovation.

Previously, nurse Ivy Dimalanta said, she and her colleagues provided similar care but on a much more random basis. Under the project, the care has become standardized.

The healthcare system has not been well designed to address the needs of seniors who may have had a lifetime of health problems, said Mary Naylor, gerontology professor at the University of Pennsylvania School of Nursing. As a result, patients sometimes fall through the cracks and return to hospitals again and again.

"That is not good for them and that is not good for society to be using resources in that way," Naylor said.

Using data from related projects, Cedars began a pilot program in 2011 and expanded it last summer. The research is continuing but early results suggest that the interventions are leading to fewer seniors being admitted to the intensive care unit and to shorter hospital stays, said Jeff Borenstein, researcher and lead clinician on the frailty project. "It definitely seems to be going in the right direction," he said.

The hospital is now working with Naylor and the University of Pennsylvania to design a program to help the patients once they go home.

"People who are frail are very vulnerable when they leave the hospital," said Harriet Udin Aronow, a researcher at Cedars. "We want to promote them being safe at home and continuing to recover."

In Gordon's case, she lives alone with the help of her children and a caregiver. The hospital didn't want her experiencing complications that would lengthen the stay, but they also didn't want to discharge her before she was ready. Under the health reform law, hospitals face penalties if patients come back too soon after being released.

Patients and their families often are unaware of the additional attention. Sitting in a chair in front of a vase of pink flowers, Gordon said she knew she would have to do her part to get out of the hospital quickly. "You have to move," she said. "I know you get bed sores if you stay in bed."

Gordon said she was comfortable at the hospital but she wanted to go back to her house as quickly as she could. "There's no place like home," she said.

Two days later, that's where she was.

anna.gorman@latimes.com

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