Case Page

 

Case Status:    DISMISSED    
On or around 02/27/2009 (Court's order of dismissal)

Filing Date: November 22, 2005

According to a press release dated July 18, 2007, Universal American Financial Corp. (NASDAQ: UHCO) announced that the securities class action entitled Robert Kemp vs. Universal American Financial Corp., Richard A. Barasch, Robert A. Waegelein and Gary W. Bryant that was filed in the United States District Court for the Southern District of New York (Case No. 05 CV 9883) in November 2005 has been dismissed with prejudice following a ruling by the Court in favor of the company defendants. This lawsuit was the consolidation of the two complaints that had alleged violations of federal securities laws in connection with, among other things, Universal American’s Medicare Supplement business.

As summarized by the Company’s FORM 10-Q for the quarterly period ended March 31, 2007, on June 26, 2006, a consolidated amended class action complaint was filed in the Kemp Action (the “Amended Complaint”), which now subsumes the Western Trust Action. The Amended Complaint asserts the same legal claims as in the original Kemp and Western Trust Actions, but also names an additional defendant and includes additional allegations. The additional defendant is a former director and former president of Pennsylvania Life Insurance Company, a subsidiary of the Company. The Amended Complaint alleges that Mr. Wehner is liable for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 on grounds similar to those asserted against the Officer Defendants. The additional assertions are supposedly based in part upon information from six former employees and agents of the Company and its subsidiaries concerning, among other things, the Company’s medical loss ratio. Like the original complaints in the Kemp and Western Trust Actions, the Amended Complaint seeks damages in an unspecified amount. On August 14, 2006, defendants served a motion to dismiss the Amended Complaint in the Kemp Action. The lead plaintiff served opposition papers to the motion on October 17, 2006. The motion was argued before the Court on December 13, 2006, and, on January 10, 2007, the complaint was dismissed without prejudice. On March 29, 2007, lead plaintiff in the Kemp Action served a second amended complaint, which carried forward most of the factual and legal assertions in the prior pleading and added certain new allegations from the alleged confidential witnesses referred to in the Amended Complaint. The second amended complaint dropped the claim that an individual defendant directly violated Section 10(b) of the Securities Exchange Ace of 1934, as amended. Defendants served a motion to dismiss the second amended complaint on May 10, 2007.

In a press release dated May 12, 2006, the court ordered the consolidation of the two actions because both related to the same series of allegedly false and misleading statements and arose from the act. It granted Western Washington Laborers-Employers Pension Trust's motion for appointment as lead plaintiff, determining that it had the largest financial interest in the litigation and otherwise met the requirements of Federal Rule of Civil Procedure 23. It also approved Western Washington's selection of lead counsel.

The Complaint alleges that defendants violated federal securities laws by issuing a series of material misrepresentations to the market during the Class Period, thereby artificially inflating the price of Universal American securities.

Specifically, the complaint alleges that defendants made materially false and misleading statements regarding the Company’s medical loss ratio. The medical loss ratio is a very closely watched metric that is an expression of the relation of the cost of health care provided to premium income. An increase in the medical loss ratio means higher expenses relative to premium income, which in turn indicates that the Company is growing less profitable. The Company stated that the profitability of its Medicare Advantage business depended, to a significant degree, on the Company’s ability to predict and effectively manage costs related to the provision of healthcare services. State regulations required that the Company monitor its medical loss ratio and the Company claimed to have systems in place that enabled it to do so. Defendants further stated that they were reversing a negative trend in the medical loss ratio.

The complaint further alleges that the truth was revealed on or around October 28, 2005, when defendants issue a release that announced a 22% year-over-year decline in net income resulting from higher medical care costs and expenses. On this news, the Company’s share price dropped precipitously, by $7.50 per share, or 33%, in regular trading on the Nasdaq National Market (“NASDAQ”) exchange, to close at below $15.00 per share. During the Class Period, the Company and Company insiders sold Universal American shares for proceeds in excess of $200 million.

Note: Universal American is a specialty health and life insurance holding company that provides a broad array of health insurance and managed care products and services to the growing senior population. The Company’s principal health insurance products for the senior market are Medicare Supplement and Medicare Advantage.

COMPANY INFORMATION:

Sector: Financial
Industry: Insurance (Life)
Headquarters: United States

SECURITIES INFORMATION:

Ticker Symbol: UHCO
Company Market: NASDAQ
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: S.D. New York
DOCKET #: 05-CV-9883
JUDGE: Hon. John F. Keenan
DATE FILED: 11/22/2005
CLASS PERIOD START: 02/16/2005
CLASS PERIOD END: 10/28/2005
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Brodsky & Smith, LLC (former Pennysylvania)
    11 Bala Avenue, Suite 39, Brodsky & Smith, LLC (former Pennysylvania), PA 19004
    610.668.7987 610.660.0450 · esmith@Brodsky-Smith.com
  2. Dyer & Shuman, LLP
    801 E. 17th Avenue, Dyer & Shuman, LLP , CO 80218-1417
    303.861.3003 800.711.6483 · info@dyershuman.com
  3. Law Offices of Brian M. Felgoise, P.C.
    Esquire at 261 Old York Road, Suite 423, Law Offices of Brian M. Felgoise, P.C., PA 19046
    215.886.1900 · securitiesfraud@comcast.net
  4. Law Offices of Charles J. Piven, P.A.
    World Trade Center-Baltimore,401 East Pratt Suite 2525, Law Offices of Charles J. Piven, P.A., MD 21202
    410.332.0030 · pivenlaw@erols.com
  5. 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
  6. Schatz & Nobel, P.C.
    330 Main Street, Schatz & Nobel, P.C., CT 06106
    800.797.5499 860.493.6290 · sn06106@AOL.com
  7. Schiffrin & Barroway LLP
    3 Bala Plaza E, Schiffrin & Barroway LLP, PA 19004
    610.667.7706 610.667.7056 · info@sbclasslaw.com
  8. Smith & Smith LLP
    3070 Bristol Pike, Suite 112, Smith & Smith LLP, PA 19020
    215.638.4847 215.638.4867 ·
  9. Stull, Stull & Brody (New York)
    6 East 45th Street, Stull, Stull & Brody (New York), NY 10017
    310.209.2468 310.209.2087 · SSBNY@aol.com
No Document Title Filing Date
COURT: S.D. New York
DOCKET #: 05-CV-9883
JUDGE: Hon. John F. Keenan
DATE FILED: 03/29/2007
CLASS PERIOD START: 02/16/2005
CLASS PERIOD END: 10/28/2005
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 LLP (New York)
    One Pennsylvania Plaza, 49th Floor, Milberg Weiss & Bershad LLP (New York), NY 10119
    212.594.5300 212.868.1229 · info@milbergweiss.com
No Document Title Filing Date
No Document Title Filing Date