The original complaint charges that United American Healthcare and certain of its officers and directors violated Sections 10(b) and 20(a) of the Securities and Exchange Act by failing to disclose the Company's improper business and financial relationship with a legislator having oversight of UAHC's Healthplan. According to the complaint, this relationship was in violation of the Company's contract with Tennessee and has caused the State of Tennessee to place UAHC's Healthplan under administrative supervision. The complaint alleges that as a result, investors could not understand or accurately assess the extent to which UAHC's ongoing operations, reported revenue, and income were dependent upon the improper political payments scheme.
Two similar lawsuits were filed against the Company and certain of its present and past officers in the United States District Court for the Eastern District of Michigan. On March 17, 2006, the court consolidated both cases for all purposes, collectively called "In re United American Healthcare Corporation Securities Litigation," Master
File No. 2:2005cv72112(LPZ/RSW) and appointed lead plaintiffs and lead counsel and liaison counsel for the proposed class in the consolidated action. The Company and the other defendants have filed motions to dismiss the plaintiffs' consolidated complaint. On January 30, 2007, the Court entered the Opinion and Order granting the Defendants’ motion to dismiss the Consolidated Amended Complaint. Judgment was entered that day dismissing the case, but the Plaintiff filed a Notice of Appeal on March 1, 2007. The appeal is currently pending in the U.S. Court of Appeals for the Sixth Circuit.
On June 2, 2008, the District Court entered the Judgment from the U.S. Court of Appeals for the Sixth Circuit. According to the Judgment, the district court's order
granting Defendants' motion, under Federal Rule of Civil Procedure 12(b)(6), to dismiss Plaintiffs' complaint is affirmed.