According to Pediatric Services of America, Inc.’s Form 10-K for the fiscal year ended September 30, 2003, the Company recorded a $3.0 million contribution to the settlement which was fully funded by its insurance carrier under its Directors and Officers insurance policy.
On January 6, 2004, the Court entered the Judgment for plaintiff in accordance with the Court’s Order, entered on December 1, 2003, granting the motion to approve the claims administration. Earlier, on March 20, 2002, the Court entered the Final Order and Judgment by U.S. District Judge Robert L. Vining, Jr., approving the settlement and terminating the case.
The complaint charges the defendants with violations of the federal securities laws (Sections 10(b) and 20 of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder), by, among other things, misrepresenting and/or omitting material information concerning Pediatric's accounts receivable, thereby artificially inflating the price of Pediatric shares during the Class Period. Specifically, far from having record revenue and earnings during the Class Period and strong internal controls for monitoring accounts receivable, the Company on or about July 29, 1998 admitted that it would be forced to dramatically increase reserves for accounts receivable primarily due to potentially higher uncollectible receivables.