According to the docket posted, on December 22, 1997, the defendants filed a motion to dismiss the amended complaint. On July 31, 1998, the Court entered the Order signed by U.S. District Judge Frank W. Bullock Jr. granting the defendants’ joint motion to dismiss the amended complaint. The action was dismissed with prejudice and closed. On August 31, 1998, the plaintiff filed a notice of appeal, and on November 12, 1999, the U.S. Court of Appeals for the Fourth Circuit issued the opinion affirming the decision of the District Court. On December 8, 1999, the Court entered the Judgment of the U.S. Court of Appeals.

On October 30, 1997, the plaintiff filed an amended complaint. Specifically, the amended complaint is founded upon the single allegation that the Defendants misled Coastal investors by failing to disclose the extent of Coastal's problems with the computer billing system that it used prior to installing a new system in 1996. Specifically, the amended complaint alleges three counts. Count I alleges the Defendants committed securities fraud in violation of§ 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and Rule 10b-5, 17 C.F.R. § 240.10b-5. Count II alleges that individual defendants are liable as control persons under § 20(a) of the Securities Exchange Act of 1934, 15 U.S.C. § 78t(a). Count III alleges the same three men are liable for negligent misrepresentation under North Carolina's common law.

The original complaint charges Coastal Physician Group, Inc., and three of its current and former officers with violations of 10(b) and 20(s) of the Securities Exchange Act of 1934 and Rule 10b-5 and negligent misrepresentations concerning the Company's operations and prospects.