Laboratory Corporation of America ("LabCorp" or the Company) manages a specialty healthcare testing operations in the United States.

The original Complaint charges that Defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of materially false and misleading statements to the market between February 13, 2002 to October 3, 2002. The Complaint alleges that by the start of the Class Period, LabCorp was being adversely impacted by a host of undisclosed negative trends, which were causing the Company to experience declining revenues and earnings. In particular, the Complaint alleges that LabCorp failed to disclose and/or misrepresented the following adverse facts, among others: (1) that LabCorp was currently experiencing a material decline in growth rates for routine/core testing volumes; (2) that LabCorp's marketing and relationship management staff were inadequate and could not effectively compete with local and regional clinical laboratory services; (3) that the service levels, including price, turnaround time and quality of service, of the Company's remote testing facilities including the Company's STAT laboratories and patient care facilities, among others, were inadequate and could not effectively compete with local and regional clinical laboratory services; (4) that the types of clinical laboratory services available through the Company's remote testing facilities were limited and could not effectively compete with local and regional clinical laboratory services; and (5) based on the foregoing, Defendants' opinions, projections and forecasts concerning the Company and its operations were lacking in a reasonable basis at all times.

The Complaint further alleges that rather than disclose the truth about the Company's weakening condition and jeopardize its ability to complete acquisitions, Defendants issued a series of materially false and misleading statements to the market in order to inflate the price of LabCorp common stock and enable the Company to use its stock as currency for a material acquisition. In addition, prior to the disclosure of the true facts about the Company, LabCorp insiders sold more than $29 million of their personally held LabCorp common stock to the unsuspecting public. The truth about LabCorp was partially revealed, when on October 3, 2002, Defendants announced that LabCorp failed to meet revenue and earnings guidance for the third quarter ended September 30, 2002, as well as the remainder of 2002, due to a revenue shortfall, primarily in the South and Southeast regions of the U.S. stemming from a material loss of routine/core testing volumes among independent physicians. Subsequently, on October 4, 2002, Defendant MacMahon admitted that Defendants were aware that the Company was losing sales to local and regional labs and had attempted, unsuccessfully, to "remedy the problem" as early as May 2002. Following these announcements, the price of LabCorp common shares collapsed, losing over 34% of their value in one day of trading to close at $21.68 per share on October 4, 2002, and falling over 58% from the Class Period high of $51.98 per share reached on or about May 10, 2002.

On June 2003, two LabCorp investors filed two separate lawsuits claiming Company executives sold hundreds of thousands of personal stock shares before an announcement in October 2002 that the Company would not meet third quarter projections. In 2004, a federal court decided to consolidate all the Complaints filed in the matter into one class action suit. The lawsuit claimed that between Feb. 13 and Oct. 3, 2002, the Company lied about its volume growth and its competitiveness in the medical community in order to inflate its stock price. …In an opinion, U.S. District Court Judge James A. Beaty wrote that the Plaintiffs in the case failed to meet the standards set forth by law to prove that LabCorp committed securities fraud. In order to prove that, the Plaintiffs had to show that the Company purposely and recklessly lied or omitted information that caused damages. In addition, they had to show that such information was not covered by the forward-looking statement safe harbor the law provides. This protection exempts statements such as projections of future revenues from liability if "accompanied by meaningful cautionary statements." The Complaint alleged that of 28 separate statements about LabCorp's financial standing issued in 2002, four were false and 24 were forward-looking statements not protected by the safe harbor provision. The court disagreed and ruled that the Company used the cautionary language required to be exempt from liability in all the forward looking statements. It also said that the other four statements could not violate security laws because these were simply optimistic statements.

According to a press release dated May 23, 2006, a class action lawsuit alleging that LabCorp executives released inaccurate information to inflate the Company's stock price has been dismissed.