The original complaint charges NeuroMetrix and certain of its officers and directors with violations of the Securities Exchange Act of 1934. NeuroMetrix designs, develops, and sells medical devices used to diagnose neuropathies and neurovascular disease in the United States. Specifically, the complaint alleges that, during the Class Period, defendants issued materially false and misleading statements regarding the Company’s NC-stat device, which is a strap-on or hand-held device that allows physicians, usually general practitioners, to test for problems like carpal tunnel syndrome and back pain without the need for an exam from a specialist. According to the complaint, throughout the Class Period, unbeknownst to shareholders, NeuroMetrix’s sales of its NC-stat device were artificially inflated as: (i) the efficacy of the Company’s NC-stat device was highly questionable and concerns were being raised by practitioners; (ii) health insurers were increasingly denying reimbursement for procedures using the Company’s NC-stat device or raising significant payment issues; (iii) the Company instructed doctors to bill under the same insurance billing codes as the competing needle procedure rather than applying for its own insurance billing code in order to enable practitioners to get reimbursement; and (iv) the Company was improperly giving doctors kickbacks in the form of free sensors for referring other doctors to the NC-stat system. As the truth began to be disclosed, shares of NeuroMetrix common stock plummeted, causing substantial losses to investors.
On June 13, 2008, U.S. District Court Judge Rya W. Zobel issued the Order granting the motion to consolidate two class action suits. On July 9, 2008, Judge Zobel issued the Order appointing Anima S.G.R.p.A as lead plaintiff for the class and appointing Schiffrin Barroway Topaz & Kessler, LLP, as lead counsel and Gilman and Pastor, LLP, as liaison counsel. On November 10, 2008, the lead plaintiff filed a Consolidated Amended Complaint, naming an additional individual defendant to the action. The defendants responded by filing a motion to dismiss on January 30, 2009.
According to a press release dated December 14, 2009, NeuroMetrix, Inc., a health care company transforming patient care through neurotechnology, today announced that United States District Court for the District of Massachusetts dismissed the consolidated federal securities class action lawsuit that had been pending against the company. The lawsuit, filed against the company and certain officers on behalf of a purported class of investors who purchased NeuroMetrix common stock between October 27, 2005 and February 12, 2008, had alleged, among other things, that the defendants made false and misleading statements and failed to disclose material information in various Securities and Exchange Commission filings, press releases and other public statements in violation of the federal securities laws. The Court entered a judgment dismissing the complaint on December 8, 2009, rejecting the plaintiffs' allegations in their entirety. The plaintiffs have the ability to appeal the Court's decision.
On January 6, 2010, the plaintiffs filed a Notice of Appeal. According to the Mandate from the First Circuit Court of Appeals, entered on March 21, 2011, the judgment of the District Court is affirmed.