Case Page

 

Case Status:    DISMISSED    
On or around 03/19/2007 (Date of order of final judgment)

Filing Date: June 22, 2004

According to a press release dated April 24, 2007, Hanger Orthopedic Group, Inc. confirmed today that on March 16, 2007, the United States District Court for the District of Maryland Southern Division granted Hanger's motion to dismiss with prejudice the consolidated class action complaints previously brought against it and certain of its directors and officers, and that the thirty-day period permitted for an appeal or motion for reconsideration had passed without the filing of any appeal or motion.

On September 1, 2006, the defendants filed a motion to dismiss the Second Consolidated Amended Class Action Complaint.

As disclosed by the Company’s FORM 10-Q for the quarterly period ended June 30, 2006, June 22, 2004 and July 1, 2004, five putative securities class action complaints were filed against the Company, four in the Eastern District of New York, Twist Partners v. Hanger Orthopedic Group, Inc., et al., No. 1:04-cv-02585 (filed 06/22/2004, E.D.N.Y); Shapiro v. Hanger Orthopedic Group, Inc., et al., No. 1:04-cv-02681 (filed 06/28/2004, E.D.N.Y.); Imperato v. Hanger Orthopedic Group, Inc., No. 1:04-cv-02736 (filed 06/30/2004, E.D.N.Y.); Walters v. Hanger Orthopedic Group, Inc., et al., No. 1:04-cv-02826 (filed 07/01/2004, E.D.N.Y.); and one in the Eastern District of Virginia, Browne v. Hanger Orthopedic Group, Inc., et al., No. 1:04-cv-715 (filed 06/23/2004, E.D. Va.). The complaints asserted that the Company’s reported revenues were inflated through certain billing improprieties at one of the Company’s facilities. The plaintiffs in Browne subsequently dismissed their complaint without prejudice, and the four remaining cases were consolidated into a single action in the Eastern District of New York encaptioned In re Hanger Orthopedic Group, Inc. Securities Litigation, No. 1:04-cv-2585 (the “Consolidated Securities Class Action”). On June 12, 2006, a Second Consolidated Amended Class Action Complaint was filed against the Company in the District of Maryland, In re Hanger Orthopedic Group, Inc. Securities Litigation, No. 8:06-cv-00579-AW (the “Second Amended Complaint”). The Second Amended Complaint asserts that the Company’s reported revenues were inflated through certain billing improprieties at some of the Company’s facilities. In addition, the Second Amended Complaint asserts that the Company violated the federal securities laws in connection with a restatement announced by the Company on August 16, 2004, restating certain of the Company’s financial statements during 2001 through the first quarter of 2004. The Second Amended Complaint purports to allege violations of Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder, as well as violations of Section 20(a) of the Exchange Act by certain of the Company’s executives as “controlling persons” of the Company. The Company has not yet filed its response to the Second Amended Complaint. On February 28, 2006, the court granted the Company’s motion to transfer the Consolidated Securities Class Action to the District of Maryland.

The original Complaint alleges that, throughout the Class Period, the Company performed poorly and that defendants waere under tremendous pressure to meet the expectations they themselves had set and thereby maintain their credibility. The complaint further alleges that, to achieve this end, they resorted to an illegal scheme to bilk the Medicaid and Medicare programs, the Veterans Administration and private insurers. Specifically, unbeknownst to investors, during the Class Period, Hanger improperly booked sales by filling out fake prescriptions and adding items that were not prescribed for existing patients in order to increase bills to Medicare and Medicaid. This practice not only artificially inflated Hanger’s revenues and earnings, it also jeopardized Hanger’s status as a Medicare and Medicaid provider, and its relationships with private insurers. It was, therefore, highly relevant to investors seeking to evaluate the effectiveness of the Company’s operations.

The complaint further alleges that the truth began to emerge on June 14, 2004, after the close of trading, when NBC News aired an investigative report in which a Hanger employee described the Company’s allegedly fraudulent billing practices. The next day, the Company issued a news release over the PR Newswire in which it admitted that the Company had initiated an investigation into “billing irregularities.” The Company’s shares had opened on June 14, 2004 at $15.75. They closed out the day at $14.41 and fell to a closing price of $12.75 on June 15, 2004 on heavy trading volume of 2.4 million shares for a two-day drop of 19 percent.

Similar class action had also been filed in the United States District Court for the Eastern District of Virginia on behalf of purchasers of Hanger Orthopedic Group's common stock during the period between February 26, 2003 and June 14, 2004. The complaint alleged that during the Class Period, defendants caused Hanger Orthopedic's shares to trade at artificially inflated levels through the issuance of false and misleading financial statements. As a result of this inflation, defendants were able to sell 167,270 Hanger Orthopedic shares, reaping insider trading proceeds of $2.4 million.

COMPANY INFORMATION:

Sector: Healthcare
Industry: Healthcare Facilities
Headquarters: United States

SECURITIES INFORMATION:

Ticker Symbol: HGR
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: D. Maryland
DOCKET #: 04-CV-02585
JUDGE: Hon. Roanne L. Mann
DATE FILED: 06/22/2004
CLASS PERIOD START: 07/29/2003
CLASS PERIOD END: 06/14/2004
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Cohen, Gettings & Caulkins, P.C.
    2200 Wilson Boulevard, Suite 800, Cohen, Gettings & Caulkins, P.C., VI 22201
    703.525.2260 703.525.2489 · info@cohengettings.com
  2. Geller Rudman, PLLC.
    197 South Federal Highway, Suite 200, Geller Rudman, PLLC., FL 33432
    561.750.3000 888.262.3131 · info@geller-rudman.com
  3. 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
  4. Milberg Weiss Bershad & Schulman LLP (New York)
    One Pennsylvania Plaza, 49th Floor, Milberg Weiss Bershad & Schulman LLP (New York), NY 10119
    212.594.5300 212.868.1229 · info@milbergweiss.com
  5. Richard B. Brualdi
    29 Broadway, Suite 1515, Richard B. Brualdi, NY 10006
    212.952.0600 212.952.0600 ·
  6. Schatz & Nobel, P.C.
    330 Main Street, Schatz & Nobel, P.C., CT 06106
    800.797.5499 860.493.6290 · sn06106@AOL.com
  7. Wolf Popper, LLP
    845 Third Avenue, Wolf Popper, LLP, NY 10022-6689
    877.370.7703 212.486.2093 · IRRep@wolfpopper.com
No Document Title Filing Date
COURT: D. Maryland
DOCKET #: 06-CV-00579
JUDGE: Hon. Roanne L. Mann
DATE FILED: 06/12/2006
CLASS PERIOD START: 03/13/2002
CLASS PERIOD END: 09/15/2004
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Lerach Coughlin Stoia Geller Rudman & Robbins LLP (Melville)
    58 South Service Road, Suite 200, Lerach Coughlin Stoia Geller Rudman & Robbins LLP (Melville), NY 11747
    631.367.7100 631.367.1173 ·
  2. Milberg Weiss Bershad & Schulman LLP (New York)
    One Pennsylvania Plaza, 49th Floor, Milberg Weiss Bershad & Schulman LLP (New York), NY 10119
    212.594.5300 212.868.1229 · info@milbergweiss.com
  3. Tydings & Rosenberg LLP
    100 East Pratt Street, Tydings & Rosenberg LLP, MD 21202
    410.752.9700 410.757.5460 · webmaster@tydingslaw.com
No Document Title Filing Date
No Document Title Filing Date