According to a press release dated January 12, 2012, the complaint charges The Company and certain of its officers and directors with violations of the Securities Exchange Act of 1934.
The complaint alleges that during the Class Period, defendants issued materially false and misleading statements regarding the Company’s business and prospects. Specifically, defendants misrepresented and/or failed to disclose the following adverse facts: (a) that the Company engaged in a scheme to fraudulently bill Medicare for hospice services for patients who did not qualify for hospice and fraudulently shifted the costs of those patients from health maintenance organizations that covered those patients prior to enrollment in hospice to the U.S. government; (b) that a significant portion of the Company’s hospice enrollments, revenues and earnings were the direct result of defendants’ scheme to enroll ineligible patients in hospice and fraudulently bill Medicare for hospice services; (c) that, in a complaint filed under seal, a former manager had accused the Company of engaging in a Company-wide scheme to enroll ineligible patients in hospice and fraudulently bill Medicare; (d) that the Company failed to maintain adequate internal controls and procedures with respect to hospice enrollments and Medicare billings; (e) that the Company’s financial results were materially overstated as a result of defendants’ fraudulent scheme to enroll ineligible patients in hospice; and (f) that, as a result of the foregoing, defendants lacked a reasonable basis for their positive statements about the Company and its prospects.
On November 16, 2011, a Bloomberg article disclosed that a former manager had accused the Company of defrauding the federal government by conspiring with health insurers to enroll Medicare patients who were not dying into hospice. The article also discussed a U.S. Department of Justice investigation into fraudulent conduct. In response to these announcements, shares of the Company’s stock fell $6.87 per share, or 11%, to close at $50.65 per share on November 16, 2011.
On April 9, 2012, the Court issued an Order appointing lead plaintiffs and approving the selection of lead counsel.
On June 18, 2012, the Plaintiffs filed their amended complaint.
On February 6, 2014, the parties entered into a Stipulation of Settlement.