By the Order and Final Judgment entered on March 21, 2007, and signed by U.S. District Judge Richard A. Schell, the settlement is approved as fair, reasonable and adequate, and the Class Members and the parties are directed to consummate the Settlement in accordance with the terms and provisions of the Stipulation. The Complaint is dismissed with prejudice.
On February 1, 2007, the Court issued a Report and Recommendations that the motion settlement is approved and that both the proposed plan of allocation and attorneys’ fees and expenses should be granted. On February 21, 2007, the Court entered the Order adopting the Report and Recommendations. Plaintiffs’ counsel was awarded $1,000,000.00 in attorneys' fees and $73,384.00 in expenses.
On October 9, 2006, a Stipulation and Agreement of Settlement – Corrected was filed. According to the Stipulation, the proposed settlement is in the amount of $3 million. The Settlement Fairness Hearing has been set for January 19, 2007.
On May 17, 2005, the Court entered the Order granting the motion to consolidate the cases into 4:05cv78. On June 3, 2006, the Court entered the Order appointing the ANSI Institutional Group as Lead Plaintiff and appointing Milberg Weiss Bershad & Schulman LLP and Entwistle & Cappucci LLP as Co-Lead Counsel, and the law firm of Claxton & Hill PLLC as Liaision Counsel. On September 28, 2005, the plaintiffs filed a Consolidated Amended Class Action Complaint, and on January 13, 2006, the defendants filed a motion to dismiss the Consolidated Amended Class Action Complaint. Before any ruling on the motion to dismiss, on August 24, 2006, a Joint Notice of Settlement was filed.
The original complaint alleges that defendants' Class Period statements about the Company's strong performance, made in quarterly press releases and SEC filings, were materially false and misleading because: (a) as part of its marketing strategy, the Company improperly paid certain physicians $1,000 for each device implanted in patients; (b) the Company's strong growth was driven, in material part, by improperly paying off physicians to recommend and implant ANSI products in patients; (c) the Company's growth was dependent on an improper and unethical practices that were inherently unsustainable, presenting a material and undisclosed risk to ANSI's business and stock price; and (d) the Company's much-touted relationship with its physician customers was, in fact, based on payments to physicians for recommending the Company's products and did not, as defendants represented, reflect growing acceptance of its products based on their benefits.
The complaint further states defendants engaged in the alleged wrongdoing so that they could profit by selling their personally held ANSI shares at artificially inflated prices. During the Class Period, ANSI insiders, including certain of ANSI’s officers, sold a total of 700,759 shares of ANSI stock for gross proceeds of $28,617,666.
On or around February 17, 2004, before the open of trading, defendants revealed that the Company had received a subpoena from the Inspector General, Department of Health and Human Services, "requesting documents relating to the Company's sales and marketing, reimbursement, Medicare and Medicaid billing, and certain other business practices." In addition, defendants announced that revenues in the first quarter of 2005 could be below previous expectations, based on early indications. In reaction to this announcement, the price of ANSI common stock plummeted, falling from $37.60 per share on February 16, 2005 to $29.37 per share on February 17, 2005, a one-day drop of 22% on unusually heavy trading volume of more than 7.9 million shares.