According to the docket, on May 16, 2002, the Court entered the Order and Final Judgment by U.S. District Judge Edward H. Johnstone. Pursuant to Rule 23 of FRCP and for the purposes of settlement, the Court certified the action as a class action on behalf of all persons who purchased common stock of Vencor, Inc. between February 10, 1997 and October 21, 1997. The complaint was dismissed with prejudice, and the case was terminated.

As reported in the firm's 10-K filing dated March 1, 2002, in December 1998, the defendants filed a motion to dismiss the case. The court converted the defendants' motion to dismiss into a motion for summary judgment and granted summary judgment as to all defendants. The plaintiff appealed the ruling to the United States Court of Appeals for the Sixth Circuit. On April 24, 2000, the Sixth Circuit affirmed the district court's dismissal of the action on the grounds that the plaintiff failed to state a claim upon which relief could be granted. On July 14, 2000, the Sixth Circuit granted the plaintiff's petition for a rehearing en banc. On May 31, 2001, the Sixth Circuit issued its en banc decision reversing the trial court's dismissal of the complaint. The defendants filed a Petition for Certiorari seeking review of the Sixth Circuit's decision in the United States Supreme Court on September 27, 2001. The parties entered into a stipulation and agreement of settlement of this action on December 26, 2001, which is subject to approval by the federal district court. The settlement payment to the certified class will be $3 million, which will include the costs of administration and plaintiffs' attorney fees, plus interest, and will be paid by the defendants' directors and officers insurance carrier.

The original Complaint charges Vencor and certain officers and directors of the Company during the relevant time frame with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, by, among other things, issuing to the investing public a series of false and misleading statements concerning Vencor's current operations and the inherent value of its shares. Because of the issuance of a series of false and misleading statements concerning Vencor's revenues and purportedly successful acquisitions, the price of Vencor common stock was artificially inflated at all relevant times. In particular, the complaint alleges that Vencor issued false and misleading financial statements during the first, second and third calendar quarters of 1997 which misrepresented and understated the impact that changes in Medicare reimbursement policies were having on the Company's core services and profitability. Furthermore, the complaint alleges that Vencor issued a series of materially false statements concerning the purportedly successful integration of its recent acquisitions and prospective earnings per share for 1997 and 1998 which the Company knew lacked any reasonable basis and were not being achieved. As a result of these materially false and misleading statements and omissions, Vencor's common stock was artificially inflated enabling several top officers to realize over $9.5 million in proceeds from illegal insider trading activities and allowing the Company to issue $750 million in debt on more favorable terms than would have been available if the full truth were known.

On October 22, 1997 Vencor announced that its current and future earnings would be adversely impacted by the Medicare changes and other negative factors impacting its business. The announcement caused Vencor's stock to decline 29% on heavy volume of 6.99 million shares, to close at $30.50 per share on October 22, 1997. Thereafter, the stock price eroded to as low as $23.00 per share on further negative revelations and currently trades at less than $25 per share.