According to the law firm press release, the complaint filed in the action alleges that, throughout the Class Period, the Defendants issued materially false and misleading statements regarding the Company's business and prospects. Specifically, the complaint alleges that the Defendants failed to disclose that the reported growth in LHC's home-based healthcare segment during the Class Period was created, in large part, by the Company engaging in a pattern of practice designed to achieve the most profitable number of therapy visits under the Medicare home health program, manipulating the number of patient visits, regardless of patient need, to maximize revenue.
The complaint alleges that the truth began to come to light on May 12, 2010, when LHC announced that the Company received a letter from the Senate Finance Committee asking LHC to respond to questions regarding therapy utilization in prior years. It is alleged that this partial disclosure caused LHC's stock price to sharply decline, removing some of the stock inflation. Then, following the Company's July 13, 2010 announcement that it had received a request from the Securities and Exchange Commission to preserve all documents relating to LHC's Medicare reimbursement
practices, the Company's stock fell further on heavy trading volume. The complaint alleges that this decrease in the price of LHC's stock was a result of some of the artificial inflation caused by Defendants' misleading statements coming out of the price.
On October 3, 2011, the Senate Committee released a report on its investigation that found that LHC and two other home health care companies engaged in practices that "at best represent abuses of the Medicare home program" and "[a]t worst, they may be examples of for-profit companies defrauding the Medicare home health program at the expense of taxpayers." That day, the price of LHC shares fell $1.42 per share, or 8.3%, to close at $15.64. Finally, on October 26, 2011, LHC disclosed that the Company was lowering its earnings forecast, in part because of a payment to the federal government to settle an inquiry into whether LHC improperly billed for home health services that were medically unnecessary. On this news, LHC's stock price fell an additional 15% in a single trading session.
On September 18, 2012, the Court issued an Order appointing lead plaintiff and approving the selection of lead counsel. On November 2, plaintiffs filed their amended complaint.
On March 15, 2013, the Court issued a Memorandum Ruling, denying the Defendants' Motion to Dismiss.
On May 23, 2013, the Court denied the motion to dismiss (#31).