Activist investor Costa Brava Partnership III LP sent a missive to MedQuist Inc. on Oct. 30 seeking to inspect the medical billing company’s shareholder list, books and other records for the past seven years, according to a regulatory filing on Tuesday.

“Accordingly, this letter shall serve as a formal request on behalf of Costa Brava to inspect and copy the company's list of all shareholders and the books and records of accounts and minutes of all proceedings of shareholders, board and executive committees from January of 2000 until the present pursuant to N.J.S.A. 14A:5-28(3),” the letter wrote. “We demand that such an inspection take place on or before Friday, Nov. 9, 2007.” 

The Costa Brava letter comes before Royal Philips Electronics NV on Nov. 2 said it would sell its 70% stake in MedQuist. On July 6, the Netherlands consumer electronics giant announced the Mount Laurel, N.J.-based unit was a noncore asset.  

Philips said it would take a fourth-quarter charge of about €320 million ($462 million) on the sale. It paid €1.3 billion for MedQuist in 2000. The division’s troubles began in late 2003 when a whistleblower charged it engaged in improper billing. It was delisted from Nasdaq in June 2004 after failing to meet reporting requirements. MedQuist has hired Bear, Stearns & Co. to advise it on strategic alternatives.

Costa Brava reported having a 5.17% stake in the billing company, according to the letter. MedQuist, which has a $416 million stock market capitalization, provides medical transcription technology and services in the United States. It also offers digital dictation, speech recognition, electronic signature, and medical coding technology and services. — Ron Orol 

See schedule 13D filing from SEC Edgar
See TheDeal.com: MedQuist recruits Bear Stearns
See TheDeal.com: Philips bids high to buy 60% of Medquist

Ron Orol is a Washington-based reporter for The Deal and author of Extreme Value Hedging: How Activist Hedge Fund Managers Are Taking on the World.