According to a press release dated January 25, 2012, the lawsuit alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by the SEC. The complaint asserts that the Company, its Chief Executive Officer, and its current and former Chief Financial Officers made materially false and misleading statements during the Class Period.
The plaintiffs state that throughout the Class Period, Defendants repeatedly claimed strong financial performance and growth, its increase in hospital admission rates, and its compliance with all applicable laws and regulations. On August 3, 2011, Defendants announced that the U.S. Department of Health and Human Services had issued a subpoena requesting "information on [the Company’s] physician referrals as well as ownership and management at our whole-hospital physician joint ventures, among other items." On this news, shares of common stock fell by $0.80, to close at $7.97 per share.
Then, on January 9, 2012, a certain analyst issued a report stating that the Company’s former compliance director filed a lawsuit against the Company for violation of Florida's Private Sector Whistleblower's Act. In addition to being the Company’s Director of Compliance at the time of his wrongful termination, this individual was a thirty-year veteran of the FBI, Healthcare Fraud Unit, in Miami. On this news, shares of Health Management dropped another $0.53 per share, falling from $7.49 per share to $6.96.
On April 30, 2012, the Court issued an order consolidating cases, appointing lead plaintiff, and approving the selection of lead counsel.
On July 30, 2012, the plaintiffs filed their amended and consolidated class action complaint. On February 25, 2013, the plaintiffs filed a second amended complaint.
On March 4, 2013, the Court issued an Order denying as moot Defendants' Motion to Dismiss.
On May 21, 2014, the Court issued an Order granting Defendant's Motion to Dismiss. The Clerk was directed to enter judgment. On June 20, the Plaintiffs filed a Notice of their Appeal of this decision to the Court of Appeals.