Accredo Health Inc. Case 04/08/2003
Settlement Approved - 11/07/2008
Accredo Health, Inc., a wholly-owned subsidiary of Medco Health Solutions, Inc. (NYSE: MHS), has reached a preliminary settlement of the securities class action pending against it in the W.D. of Tennessee. The case, originally filed in April 2003, stems from allegations that loss reserves relating to a business Accredo acquired were materially understated. The settlement is for $33 million.
Lawsuit Filed - 08/07/2008
Discovery is still in progress as of August 7, 2008. Plaintiffs filed a motion for Partial Summary Judgment on May 9, 2008. Ruling on the motion is still pending. Accredo filed its own motion for Summary Judgment on May 16, 2008.
On March 7, 2006, a Report and Recommendations was filed recommending that the plaintiffs’ motion for class certification be granted. On April 19, 2006, the Court entered the Order signed by U.S. District Judge Bernice B. Donald adopting the Report and Recommendations.
As summarized by a law firm’s web site, additional cases were filed on behalf of investors. On June 9, 2003, motions were made for appointment of lead plaintiff and counsel. On June 19, 2003, the Court consolidated the various actions and appointed lead plaintiff and counsel. On July 2, 2003, the Court vacated the June 19 order consolidating the cases and appointing lead plaintiff and counsel. The cases remained consolidated. In an order dated June 23, 2004, the Court reappointed lead plaintiff and counsel. On September 15, 2004, a consolidated complaint was filed, and defendants later filed a motion to dismiss. On April 11, 2005, the judge denied the motion to dismiss. On May 16, 2005, Defendants filed an answer to the consolidated complaint. On July 22, 2005, lead plaintiffs filed a motion for class certification. The court has yet to rule on this matter.
The original Complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between June 16, 2002 and April 7, 2003, thereby artificially inflating the price of Accredo common stock. The Complaint alleges that these statements were materially false and misleading because they failed to disclose and misrepresented the following adverse facts, among others: (a) that the Company was failing to timely record an impairment in the value of certain receivables that it had acquired in a recent acquisition. As a result, the Company’s reported financial results were artificially inflated throughout the Class Period; (b) as a result of the foregoing, the Company’s financial statements published during the Class Period were not prepared in accordance with Generally Accepted Accounting Principles and were therefore materially false and misleading; (c) that the Company would not have been able to meet its stated earnings guidance had it properly reserved for its accounts receivables; and (d) based on (a)-(c), defendants’ earnings guidance and positive statements concerning the Company was lacking in a reasonable and therefore materially false and misleading. On April 8, 2002, prior to the opening of the market, Accredo shocked the market by announcing that it was reducing its previously issued earning guidance and that it was examining the adequacy of reserves for accounts receivables that it acquired in a recent acquisition. In response to this announcement, the price of Accredo Health common stock declined precipitously falling from $25.40 per share to as low as $13.76 per share, on extremely heavy volume. During the Class Period, Accredo insiders sold more than $12 million worth of their personally-held Accredo stock while in possession of the true facts about the Company.