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Case Status:    SETTLED
On or around 12/27/2004 (Date of order of final judgment)

Filing Date: May 07, 2002

According to the Company’s FORM 10-K for the fiscal year ended December 31, 2004, on December 22, 2004, the court entered a final order approving the settlement and providing for notice to shareholders

In a press release dated June 14, 2004, Specialty Laboratories, Inc., announced an agreement in principle to settle the securities class action lawsuits brought in the United States District Court for the Central District of California, and subsequently consolidated as "In re Specialty Laboratories Securities Litigation." Subject to approval by the District Court, the settlement calls for payment of $12 million, the entirety of which will be paid by Specialty's insurance carriers, to resolve all claims asserted against Specialty and the individual defendants in this case.

The original complaint charges Specialty Labs and certain of its officers and
directors with violations of the Securities Exchange Act of 1934 and the
Securities Act of 1933. Specialty Labs, a research-based clinical laboratory,
develops and performs esoteric clinical laboratory tests. The Company went
public in 12/00 selling five million shares at $16.00 per share. The complaint
alleges that in June and October of 2001, California Department of Health
Services representing the State of California and acting as agent of the Centers
for Medicare and Medical Services ("CMS") inspected Specialty Labs. The
inspectors were mortified by their findings. As a result of the inspections,
Specialty Labs was initially cited by the State of California with 20
deficiencies, and then in a separate statement in February 2002 for 12
overlapping deficiencies by CMS. Specialty Labs was notified that if it failed
to correct 6 of the issues, relating primarily to personnel licensing and the
enforcement of regulatory requirements, the Company would face monetary and
other penalties, including the possible revocation of its license. Specialty
Labs' deficiencies in question relate to two broad areas, both of which focus on
the number of licensed personnel in the lab. First, historically there have been
required ratios for labs in terms of the number of licensed supervisors per the
number of testing personnel. Second, California implemented a requirement for
labs performing testing in the areas of cytogenetics and molecular genetics.
Specifically, directors of such operations must now be at least at the M.D. or
Ph.D. level and must also be Board certified in their area of focus. However,
defendants sought to avoid compliance with California's laboratory requirements
in order to inflate the Company's revenue and EPS.

On April 11, 2002, before the market opened, the Company issued a press
release which provided a more comprehensive explanation and discussion of the
compliance problems. On this news, the Company's shares plunged to an all time
low of $10-1/4, more than an 80% drop from the Class Period high.

COMPANY INFORMATION:

Sector: Healthcare
Industry: Healthcare Facilities
Headquarters: United States

SECURITIES INFORMATION:

Ticker Symbol: SP
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: C.D. California
DOCKET #: 02-CV-03728
JUDGE: Hon. Dean D. Pregerson
DATE FILED: 05/07/2002
CLASS PERIOD START: 12/08/2000
CLASS PERIOD END: 04/10/2002
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Leo W. Desmond
    2161 Palm Beach Lakes Boulevard, Suite 204, Leo W. Desmond, FL 33409
    561.712.8000 561.712.8000 · stocklaw@bellsouth.net
  2. Milberg Weiss Bershad Hynes & Lerach LLP (New York, NY)
    One Pennsylvania Plaza, Milberg Weiss Bershad Hynes & Lerach LLP (New York, NY), NY 10119-1065
    212.594.5300 ·
  3. Schiffrin & Barroway LLP
    3 Bala Plaza E, Schiffrin & Barroway LLP, PA 19004
    610.667.7706 610.667.7056 · info@sbclasslaw.com
  4. Scott & Scott LLC (Connecticut)
    P.O. Box 192, 108 Norwich Avenue, Scott & Scott LLC (Connecticut), CT 06415
    860.537.5537 860.537.4432 · scottlaw@scott-scott.com
No Document Title Filing Date
COURT: C.D. California
DOCKET #: 02-CV-03728
JUDGE: Hon. Dean D. Pregerson
DATE FILED: 03/31/2003
CLASS PERIOD START: 12/08/2000
CLASS PERIOD END: 04/10/2002
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Lerach Coughlin Stoia Geller Rudman & Robbins LLP (San Diego)
    401 B Street, Suite 1700, Lerach Coughlin Stoia Geller Rudman & Robbins LLP (San Diego), CA 92101
    206.749.5544 206.749.9978 · info@lerachlaw.com
  2. Milberg Weiss Bershad Hynes & Lerach LLP (Los Angeles, CA)
    355 S Grand Ave - Ste 4170, Milberg Weiss Bershad Hynes & Lerach LLP (Los Angeles, CA), CA 90071-3172
    213.617.9007 ·
No Document Title Filing Date