Case Page

 

Case Status:    DISMISSED    
On or around 06/07/2005 (Date of order of final judgment)

Filing Date: March 22, 2004

According to the Company’s FORM 10-Q for the quarterly period ended June 30, 2005, on or about March 22 through March 26, 2004, two purported class action Complaints were filed against the Company and certain of its officers and directors in the United States District Court for the Eastern District of Pennsylvania. Pursuant to an Order of the Court, these two cases were consolidated into one action captioned: In re Universal Health Services, Inc. Securities Litigation, Case No. CV-04-01233-JP. Subsequently, the plaintiffs filed an Amended Consolidated Class Action Complaint. The Court granted defendants’ motion to dismiss this complaint and thereafter dismissed the action with prejudice when plaintiffs chose not to replead.

The original complaint alleges 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 material misrepresentations to the market during the Class Period. Specifically, the complaint alleges that defendants materially misled the investing public, thereby inflating the price of UHS stock, by publicly issuing false and misleading statements and omitting to disclose material facts necessary to make defendants' statements as set forth herein, not false and misleading. These statements and omissions were materially false and misleading in that they failed to disclose material adverse information and misrepresented the truth about the Company, its financial performance, earnings momentum, and future business prospects, including: (a) UHS was unable to compete effectively in key markets; (b) UHS hospitals were losing better-paying patients to their competitors and the proportion of uninsured patients, who constitute a greater credit risk, was increasing; (c) due to poor case management, certain UHS hospitals were unable to effectively manage their caseloads and, as a consequence, had experienced an increase in the number of patients who remained hospitalized at UHS facilities beyond the period reimbursable by Medicaid and Medicare and that, therefore, the hospitals were not receiving full payments for the services provided; (d) defendants failed to properly write-off uncollectible receivables, and materially overstated UHS's financial results by maintaining known uncollectible accounts as assets during the Class Period; (e) the Company's allowance for doubtful accounts was insufficient and, as a result, the Company's reported operating income was artificially inflated; and (f) the Company's reported operating income was not a true measure of the Company's operating performance because defendants failed to properly deduct from operating income the appropriate allowance for doubtful accounts.

Further, the complaint alleges that on March 1, 2004, before the markets opened, defendants shocked investors by withdrawing their guidance for 2004 and announcing that earnings per diluted share for the three-month period ending March 31, 2004 could be as much as 25% lower than the $0.84 per diluted share recorded in the same period in the prior year. Defendants attributed the decline in substantial part to UHS's inability to compete effectively in two key markets in Nevada and Texas, erosion of UHS's market share, poor case management resulting in an increase in the length of patient stays beyond the period reimbursable by Medicaid or Medicare, and a pronounced increase in bad debt from uninsured patients. The Company which had already increased its provision for doubtful accounts in the fourth quarter of 2003 to $74.3 million, or 7.8% of revenues, as compared to $58 million, or 6.9% of revenues, during the prior year's fourth quarter, said that bad debt in 2004 was likely to exceed the Company's previously reported expectation of 9.5% of revenues. On this news, the price of UHS shares fell $9.05, or 17%, to $44.88.

COMPANY INFORMATION:

Sector: Healthcare
Industry: Healthcare Facilities
Headquarters: United States

SECURITIES INFORMATION:

Ticker Symbol: UHS
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: E.D. Pennsylvania
DOCKET #: 04-CV-1233
JUDGE: Hon. John R. Padova
DATE FILED: 03/22/2004
CLASS PERIOD START: 07/21/2003
CLASS PERIOD END: 02/27/2004
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Berger & Montague PC
    1622 Locust Street, Berger & Montague PC, PA 19103
    800.424.6690 215.875.4604 · investorprotect@bm.net
  2. Cauley Geller Bowman Coates & Rudman, LLP (New York)
    200 Broadhollow, Suite 406, Cauley Geller Bowman Coates & Rudman, LLP (New York), NY 11747
    631.367.7100 631.367.1173 ·
  3. Federman & Sherwood (Oklahoma City)
    120 North Robinson, Suite 2720, Federman & Sherwood (Oklahoma City), OK 73102
    405-235-1560 · wfederman@aol.com
  4. 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 ·
  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: E.D. Pennsylvania
DOCKET #: 04-CV-1233
JUDGE: Hon. John R. Padova
DATE FILED: 09/29/2004
CLASS PERIOD START: 07/21/2003
CLASS PERIOD END: 02/27/2004
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Bernard M. Gross
    1500 Walnut Street, Suite 600, Bernard M. Gross, PA 19102
    215.561.3600 215.561.3000 · bmgross@BernardMGross.com
  2. Lerach Coughlin Stoia Geller Rudman & Robbins LLP (Melville)
    200 Broadhollow, Suite 406, Lerach Coughlin Stoia Geller Rudman & Robbins LLP (Melville), NY 11747
    631.367.7100 631.367.1173 · info@lerachlaw.com
  3. Lerach Coughlin Stoia Geller Rudman & Robbins LLP (San Diego)
    655 West Broadway, Suite 1900, Lerach Coughlin Stoia Geller Rudman & Robbins LLP (San Diego), CA 92101
    619.231.1058 619.231.7423 ·
No Document Title Filing Date
No Document Title Filing Date