According to a press release dated July 24, 2009, the complaint charges Skilled Healthcare and certain of its officers and directors violated the federal securities laws by misrepresenting the true amount of its income in its IPO prospectus and in other SEC filings and public communications. In an announcement dated June 9, 2009, Skilled Healthcare announced that the Company's prior financial statements for the annual and quarterly periods between January 1, 2006 and March 31, 2009 should no longer be relied upon and that the Company expected to restate those financial statements. According to the announcement, Skilled Healthcare discovered errors relating to its accounting for reserves on its accounts receivable. The Company estimated that the cumulative charges against after-tax earnings in the aggregate would be between $8 million and $9 million. The Complaint alleges that this adverse disclosure caused the value of Skilled Healthcare's stock to fall, damaging investors.
On Novemeber 10, 2009, an order re: appointment of lead plaintiff and lead counsel; filing of amended complaint and defendants’ response thereto was entered into the court’s docket.
On August 30, 2010, a Stipulation Of Settlement was filed Subject to the approval of the Court, the Stipulation is intended by the Settling Parties to fully, finally, and forever resolve, discharge, and settle the Litigation and Released Claims, upon and subject to the terms and conditions hereof.
On September 13, 2010, the Court issued an Order Preliminarily Approving Settlement and Providing for Notice of Proposed Settlement in this action.
According to the Company's Form 10-K For the Fiscal Year Ended December 31, 2010, in September 2010, the parties reached a settlement in the amount of $3.0 million. The Company contributed the portion of its $1.0 million insurance retention that it had not incurred in legal fees ($0.5 million), and its insurance carriers contributed the balance of the $3.0 million. The District Court entered an order granting final approval of the settlement in January 2011.