The original Complaint alleges that defendants violated the federal securities laws, by issuing a series of material misrepresentations during the Class Period thereby artificially inflating the price of Health Management securities. The Complaint alleges, among other things, that defendants engaged in a scheme to manipulate Health Management's policies in order to create the impression that the Company had its "bad debt expenses" under control in order to borrow additional money, and to get the Board to approve of their recapitalization plan. On January 17, 2007, Health Management announced a major recapitalization which was completed in March 2007 and which required the company to borrow $3.25 billion of new debt to refinance existing debt and pay shareholders a special one-time cash dividend of $10.00. The Individual Defendants benefited substantially from this one time dividend, given that they were major shareholders and each defendant received large sums of money.
On May 14, 2008, Judge Marcia Morales Howard granted the motion to consolidate the cases, granted City of Ann Arbor Employees' Retirement System’s motion for lead plaintiff and approved Ann Arbor's selection of counsel. Coughlin Stoia Geller Rudman & Robbins LLP was appointed lead counsel. On July 31, 2008, the lead plaintiff filed a Consolidated Class Action Complaint. On October 16, 2008, the defendants filed a motion to dismiss the Consolidated Class Action Complaint. On July 18, 2009, the Court entered the Opinion and Order signed by Judge William O. Bertelsman granting the defendants’ motion to dismiss with prejudice. Judgment was further entered that day and the case is now closed.