According to the docket, on March 8, 2006, the Court entered the Order signed by U.S. District Judge James J. Brady dismissing the action without prejudice to the right to reopen the action if a settlement is not consummated. On July 5, 2006, the plaintiffs filed a joint motion to dismiss the claims with prejudice. According to the motion, to avoid, among other things, the costs, risks and uncertainties of litigation, Plaintiffs and Defendants have agreed to a settlement, which they believe to be appropriate and fair. In accordance with the settlement, Plaintiffs and Defendants jointly move to dismiss with prejudice the Plaintiffs' individual claims on the grounds that this matter has been fully and finally compromised. In addition, the Parties jointly move to dismiss this suit without prejudice. On July 6, 2006, the Court entered the Order granting the joint motion to dismiss.
According to the Company’s FORM 10-Q for the quarterly period ended June 30, 2006, on June 28, 2006, the Company entered into a settlement agreement with the class representatives in two class action lawsuits filed on behalf of all purchasers of the Company’s common stock between November 15, 2000, and June 13, 2001, against the Company and three of its executive officers in the United States District Court for the Middle District of Louisiana. On July 5, 2006, the United States District Court for the Middle District of Louisiana issued an order dismissing the consolidated lawsuits. The entire settlement amount of $0.3 million, inclusive of all expenses and attorneys’ fees, was covered by insurance.
As summarized by the Company’s FORM 10-K For the Fiscal Year Ended December 31, 2005, on August 23 and October 4, 2001, two class action lawsuits were filed, which have since been consolidated, on behalf of all purchasers of the Company’s common stock between November 15, 2000 and June 13, 2001, against the Company and three of its executive officers, in the United States District Court for the Middle District of Louisiana. In May of 2003, the trial court certified the class, and the Company appealed that decision. On February 17, 2005, the United States Court of Appeals for the Fifth Circuit vacated the trial court’s certification order and remanded the case for further proceedings relative to class certification. The parties have agreed to a stay of all depositions and other discovery (subject to certain limited exceptions) pending a ruling on class certification. The suits seek damages based on the decline in the Company’s stock price following an announced restatement of earnings for the fourth quarter of 2000 and first quarter of 2001, alleging that the Company’s management knew or were reckless in not knowing the facts giving rise to the restatement.
The original complaint charges Amedisys and certain individual defendants with violations of the federal securities laws. Specifically, during the Class Period, the defendants issued to the investing public materially false and misleading financial information concerning the Company' s publicly reported revenues and earnings. Amedisys touted positive financial results and profitable net service revenue in connection with its home health nursing services. All along, however, Amedisys improperly recognized net services revenue in the fourth quarter of 2000 and the first quarter of 2001 in violation of GAAP.
The complaint further alleges that on or around June 13, 2001, Amedisys issued a press release announcing that its previously announced financial results for the fourth quarter of 2000 and the first quarter of 2001 were incorrect. Specifically, the Company announced that discrepancies in the Medicare Prospective Payment System resulted in a negative adjustment to net services revenue of between $4 and $7 million. As a result of this revelation, the Company's stock price plummeted almost 60 percent to close at $4.10 per share on June 13, 2001, far from its closing price of $9.92 per share on June 12, 2001.