Gentiva Health Services, Inc. Summary: According to the complaint filed November 2, 2010, this is a securities fraud action brought under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule IOb-5 promulgated thereunder by the SEC by plaintiff on behalf of all those who purchased the publicly traded common stock of Gentiva during the Class Period to recover damages caused to the Class by defendants' violations of the securities laws. Throughout the Class Period, a material portion of the Company's reported net revenue was derived from reimbursements by Medicare. Respectively, in 2008 and 2009, 52% and 68% of Gentiva's reported net revenues came from Medicare.
Throughout the Class Period, Defendants reported growth in revenue and earnings that were, in large part, based on material increases in Medicare revenues and admissions in the Company's Home Health segment. But defendants failed to disclose that the Company improperly increased the number of in-home therapy visits to patients for the purpose of triggering higher reimbursement rates under the Medicare PPS. As a result of the Company's improper conduct, its reported sales and earnings were materially inflated and, based on the foregoing, defendants lacked a basis for their positive statements about the Company, its prospects and growth.
On May 13, 2010, the Wall Street Journal reported that the United States Senate Finance Committee launched an investigation into the practices of companies that provide in-home therapy visits reimbursed by Medicare, including Gentiva. During the Class Period, certain of the Company's top executives and/or directors sold approximately 531,279 Gentiva shares at artificially inflated prices for proceeds of approximately $12.8 million.
As summarized by the Company's FORM 10-Q for the quarterly period ended September 30, 2011, on January 21, 2011, the Minneapolis Police Relief Association (the “MPRA”) moved to intervene as a named plaintiff in the action and further requested that, to the extent its motion was granted, the Court appoint it lead plaintiff. On February 7, 2011, the defendants filed a limited objection to the motion to intervene and, on February 17, 2011, the MPRA responded. On July 19, 2011, the Court granted the MPRA’s motion to intervene as a named plaintiff, but denied, without prejudice, its request to be appointed lead plaintiff. On July 25, 2011, plaintiff Endress filed a motion seeking to withdraw as plaintiff, and the MPRA renewed its motion seeking to be appointed lead plaintiff.
On September 14, October 11, October 20 and October 25, 2011, four additional putative shareholder class action complaints, captioned Cement Masons & Plasterers Joint Pension Trust v. Gentiva Health Services, Inc. et al., Civil Action No. 11-CV-4433, International Union of Operating Engineers Pension Fund of Eastern Pennsylvania and Delaware v. Gentiva Health Services, Inc. et al., Civil Action No. 11-CV-4906, Arkansas Teacher Retirement System v. Gentiva Health Services, Inc. et al., Civil Action No. 11-CV-5126, and Douglas Dahlgard v. Gentiva Health Services, Inc. et al., Civil Action No. 11-CV-5199, respectively, were filed in the United States District Court for the Eastern District of New York. Like the Endress action, the Cement Masons, International Union, Arkansas Teacher, and Dahlgard actions name Gentiva and certain current and former officers as defendants, and assert claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 in connection with the Company’s participation in the Medicare HH PPS. The complaints allege that the Company’s public disclosures misrepresented and failed to disclose that the Company improperly increased the number of in-home therapy visits to patients for the purposes of triggering higher reimbursement rates under the HH PPS, which caused an artificial inflation in the price of Gentiva’s common stock during the period between July 31, 2008 and July 20, 2010 (Cement Masons), July 31, 2008 and September 30, 2011 (International Union and Arkansas Teacher), and July 31, 2008 and October 4, 2011 (Dahlgard).
On October 5, 2011, the Cement Masons & Plasterers Joint Pension Trust (“Cement Masons”) requested that the Court consolidate the Cement Masons action with the Endress action and further requested that the Court appoint Cement Masons lead plaintiff. On October 11, 2011, the International Union of Operating Engineers Pension Fund of Eastern Pennsylvania and Delaware (“International Union”) requested consolidation of the Cement Masons action and the International Union action with the Endress action and further requested that the Court appoint International Union lead plaintiff. On October 20, 2011, the Arkansas Teacher Retirement System (“Arkansas Teacher”) requested consolidation of the Cement Masons, International Union and Arkansas Teacher actions with the Endress action and further requested that the Court appoint Arkansas Teacher lead plaintiff. On October 27, 2011, Douglas Dahlgard (“Dahlgard”) requested consolidation of the Cement Masons, International Union, Arkansas Teacher and Dahlgard actions with the Endress action and further requested that the Court appoint Dahlgard lead plaintiff.
On November 2, 2011, the Court (i) granted plaintiff Endress’ motion to withdraw as plaintiff; (ii) ordered the consolidation of the Endress, Cement Masons, International Union, Arkansas Teacher and Dahlgard actions under the caption In re Gentiva Securities Litigation, Civil Action No. 10-CV-5064; and (iii) set a deadline of January 2, 2012 for all motions by any putative class member seeking to be appointed lead plaintiff.
On January 26, 2012, the Court issued an Order appointing lead plaintiff and approving the selection of lead counsel.
On April 16, 2012, plaintiffs filed an amended consolidated complaint.
On March 25, 2013, the Court issued an Order granting the Defendants' motion to dismiss. Plaintiffs were given leave to file an amended complaint. Plaintiffs filed their amended complaint on May 10.
On September 19, 2013, the Court issued an Order granting in part and denying in part the motion to dismiss of the defendants.
SIC Code: 8082
Industry: Healthcare Facilities
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