According to the law firm press release, the complaint charges Accretive Health and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Accretive Health provides revenue cycle management services for hospitals and healthcare providers in the United States.
The complaint alleges that during the Class Period, defendants issued materially false and misleading statements regarding the Company’s business and prospects. Specifically, the Company failed to disclose that it was violating health privacy laws, state debt collection laws and state consumer protection laws. As a result of defendants’ false statements, Accretive Health’s stock traded at artificially inflated prices during the Class Period, reaching a high of $30.80 per share on August 1, 2011.
On March 29, 2012, Accretive Health announced that in response to a lawsuit filed by Minnesota’s Attorney General, the Company had agreed to no longer collect debts on behalf of Fairview Health Services (“Fairview”) and would transition management of those operations to Fairview. Accretive Health further announced that it expected this change to negatively impact its fiscal year 2012 revenue by $62 million to $68 million. Then, on April 24, 2012, the Minnesota Attorney General
released a report which highlighted aggressive practices used by Accretive Health, including demanding payment from people seeking care in emergency rooms, cancer wards and delivery rooms. As a result of this news, Accretive Health’s stock
plummeted $7.63 per share to close at $10.86 per share on April 25, 2012, a one-day decline of 41%.
According to the complaint, the true facts, which were known by the defendants but concealed from the investing public during the Class Period, were as follows: (a) the Company was violating privacy standards under the Health Insurance Portability and Accountability Act and the Health Information Technology for Economic and Clinical Health Act by, among other things, (i) failing to provide appropriate safeguards to prevent the misuse or disclosure of protected health information; (ii) failing to keep all protected health information strictly confidential; and (iii) failing to develop, implement, maintain and use appropriate technical and physical safeguards to preserve the integrity, confidentiality and availability of protected health information and to prevent non-permitted use or disclosure of the information; (b) the Company failed to encrypt protected patient health information; (c) the Company was violating the terms of its contract with Fairview by failing to limit access of protected health information to the persons or classes of persons in its workforce who needed access to it in order to carry out their duties; (d) the Company was violating Minnesota state debt collection laws by, among other things, failing to provide patients with required disclosures identifying itself as a debt collection agency; (e) the Company was violating Minnesota consumer protection laws by, among other things, failing to disclose to patients the extent of the Company’s access to data and the manner in which it utilizes such data; and (f) the effect the Company’s violations of health privacy laws, state debt collection laws and state consumer protection laws would
have on its future earnings and on its relationship with Fairview.
According to the docket entry filed July 3, 2012, the Court granted the motion to consolidate cases.
On October 12, 2012, the Lead Plaintiffs filed a Class Action Complaint.
On September 19, 2013, the parties entered into a Settlement Agreement. The Settlement was preliminarily approved by the Court on October 4.