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Case Status:    SETTLED
On or around 01/07/2000 (Date of order of distribution of settlement)

Filing Date: April 02, 1996

According to the Company’s FORM 10-Q For the Quarterly Period Ended August 31, 1997, on April 7, 1997, Horizon/CMS paid the $17.0 million, in trust, to the plaintiffs' lead counsel. Also in April, 1997, Horizon/CMS paid $2.25 million to CMS's directors' and officers' liability insurance carrier in exchange for the carrier's assumption of the remaining risk contingency. On August 19, 1997, the plaintiffs and the individual defendants announced to the Court that they had reached a settlement of the claims excluded by the Company's prior settlement. This proposed settlement calls for the claims to settle by a payment of $4.0 million. This entire amount will be paid by CMS's directors' and officers' liability insurance carrier. The effect of this settlement is to discharge the Company of its $3.0 million guarantee described above. Accordingly, subject to negotiation and execution of definitive agreements between the Company and its carrier reflecting such settlement, the Company's $17.0 million payment will represent the Company's total liability to the plaintiffs in this matter. On September 12, 1997, the Court, after hearing, entered an order approving the settlement. The time for appeal has expired and, accordingly, the judgment has become final.

In a press release date February 13, 1997, Horizon/CMS Healthcare
Corporation (NYSE: HHC) announced today that it had reached an agreement in
principle to settle the claims against it and certain of its current and
former directors in the consolidated class action lawsuit filed in New Mexico
Federal District Court in April, 1996. In this lawsuit, the plaintiffs
alleged violations of federal and New Mexico state securities laws. Among
such violations, the plaintiffs alleged that the Company, certain of its
current and former directors and certain former directors of Continental
Medical Systems, Inc. ("CMS"), disseminated materially misleading statements
or omitted disclosing material facts about the Company and its operations.
Under the proposed settlement, Horizon/CMS will pay a minimum amount of
$17 million to resolve all claims against the Company and its current and
former directors, excluding those claims arising against the former directors
of CMS for conduct occurring prior to the merger between CMS and Horizon. The
Company believes these excluded claims are covered by directors' and officers'
liability insurance. Under the settlement, the maximum amount payable by the
Company is $20 million to completely and finally resolve all claims in the
litigation, including any amounts related to claims against former directors
of CMS. In agreeing to settle the litigation, none of the defendants concede
or admit to any of the plaintiffs' claims. The settlement is subject to the
execution of definitive documentation and court approval.

During the fourth quarter of fiscal 1996, Horizon/CMS was served with several complaints by current or former stockholders of Horizon/CMS on behalf of all persons who purchased Horizon/CMS Common Stock between June 6, 1995 and March 15, 1996. Each of these lawsuits was filed in the United States District Court for the District of New Mexico, in Albuquerque, New Mexico. In July 1996, the Court entered its order consolidating these lawsuits into a single action styled In re Horizon/CMS Healthcare Corporation Securities Litigation, Case No. CIV 96-0442-BB. On September 30,1996, the consolidated putative class plaintiffs filed their consolidated complaint. In this complaint, the plaintiffs alleged violations of federal and New Mexico state securities laws. Among such violations, the plaintiffs alleged that Horizon/CMS, certain of its current and former directors and certain former directors of CMS, disseminated materially misleading statements or omitted disclosing material facts about Horizon/CMS and its operations.

The original complaint alleges that the defendants disseminated false and misleading statements about the company's business, certain of its acquisitions, the operations and integration of those acquisitions, the company's earnings growth, financial statements, and projections, and the status and magnitude of regulatory investigations into the company's Medicare billing practices. The company allegedly artificially inflated revenues and earnings by, among other things, improperly including in current revenue retroactive Medicare billings that were of questionable merit, failing to properly reserve for or write-off accounts receivable, and improperly recording inflated fees. In so doing, the company allegedly violated Generally Accepted Accounting Principles. Horizon/CMS provides rehabilitation, nursing, and specialty healthcare services.

COMPANY INFORMATION:

Sector: Healthcare
Industry: Healthcare Facilities
Headquarters: United States

SECURITIES INFORMATION:

Ticker Symbol: HHC
Company Market: New York SE
Market Status: Public (Listed)

About the Company & Securities Data


"Company" information provides the industry and sector classification and headquarters state for the primary company-defendant in the litigation. In general, "Securities" information provides the ticker symbol, market, and market status for the underlying securities at issue in the litigation.

In most cases, the primary company-defendant actually issued the securities that are the subject of the litigation, and the securities information and company information relate to the same entity. In a small subset of cases, however, the primary company-defendant is not the issuer (for example, cases against third party brokers/dealers), and the securities information and company information do not relate to the same entity.
COURT: D. New Mexico
DOCKET #: 96-CV-0442
JUDGE: Hon. Bruce D. Black
DATE FILED: 04/02/1996
CLASS PERIOD START: 07/06/1995
CLASS PERIOD END: 03/01/1996
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Faruqi & Faruqi LLP (New York) (former)
    320 East 39th Street, Faruqi & Faruqi LLP (New York) (former), NY 10016
    212.983.9330 212.983.9331 · Nfaruqi@faruqilaw.com
  2. Freedman, Boyd, Daniels, Peifer, Hollander, Guttman & Goldberg, P.A

    ·
  3. Milberg Weiss Bershad Hynes & Lerach LLP (San Diego, CA)
    600 West Broadway, 1800 One America Plaza, Milberg Weiss Bershad Hynes & Lerach LLP (San Diego, CA), CA 92101
    800.449.4900 · support@milberg.com
  4. Robert C. Sussner

    ·
  5. Schiffrin & Barroway LLP
    3 Bala Plaza E, Schiffrin & Barroway LLP, PA 19004
    610.667.7706 610.667.7056 · info@sbclasslaw.com
No Document Title Filing Date
COURT: D. New Mexico
DOCKET #: 96-CV-0442
JUDGE: Hon. Bruce D. Black
DATE FILED: 09/30/1996
CLASS PERIOD START: 07/06/1995
CLASS PERIOD END: 03/01/1996
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Milberg Weiss Bershad Hynes & Lerach LLP (San Diego, CA)
    600 West Broadway, 1800 One America Plaza, Milberg Weiss Bershad Hynes & Lerach LLP (San Diego, CA), CA 92101
    800.449.4900 · support@milberg.com
No Document Title Filing Date
No Document Title Filing Date