Healthways Inc (NASDAQ: HWAY) Investor Securities Class Action Lawsuit 06/05/2008

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Company Name(s): 
Healthways
Case Name: 
Healthways Shareholder Class Action Lawsuit 06/05/2008
Case Status: 
Lawsuit Filed
Case Status: 
Settlement Approved
Affected Securities
NASDAQ: HWAY
Lawsuit Overview
Type of Lawsuit: 
Shareholder Class Action
Date Filed: 
06/05/2008
Class Period Begin: 
07/05/2007
Class Period End: 
08/25/2008
Court of Filing: 
U.S. District Court for the Middle District of Tennessee
Deadline To File for Lead: 
06/04/2008
Date Settled: 
09/27/2010
Settlement Amount: 
$23,600,000
Deadline to Participate in Settlement: 
10/25/2010
Settlement Notice: 
Settlement Proof: 
Summary: 

September 27, 2010 - The court entered the order approving the motion for attorneys' fees and expenses.

September 24, 2010 - The court held a final settlement hearing, approved the settlement, entered the orders approving the plan of allocation and dismissed the action with prejudice.

June 2, 2010 - The court preliminarily approved the settlement.

May 21, 2010 - Parties filed a stipulation of settlement.

March 9, 2009 - The court denied the defendants’ motion to dismiss.

November 12, 2008 - The defendants filed a motion to dismiss.

September 22, 2008 - The lead plaintiff filed a consolidated complaint on behalf of investors who purchased Healthways Inc (NASDAQ: HWAY) common shares between July 5, 2007 and August 25, 2008. The lead plaintiff alleges that the defendants violated the Securities Exchange Act of 1934 by issuing false and misleading statements between July 5, 2007 and August 25, 2008.

August 8, 2008 - The lead plaintiff and lead counsel were appointed and all cases were consolidated.

August 4, 2008 - A lead plaintiff motion was filed.

June 5, 2008 - An investor in shares of Healthways Inc (NASDAQ: HWAY) filed a lawsuit in the U.S. District Court for the Middle District of Tennessee against Healthways Inc in violation of Federal Securities Laws.

The complaint alleges that, between October 17, 2007 and February 26, 2008, Healthways Inc issued a series of materially false and misleading statements concerning Healthways Inc’s financial performance and prospects. According to the complaint, starting in 2005, Healthways, along with four other companies, became involved in the Medicare Health Support (“MHS”) pilot program launched by the Centers for Medicare & Medicaid Services (“CMS”). The MHS program was designed to improve quality of care and life for people with multiple chronic conditions, and to help the Medicare program and its beneficiaries save money. Under the plan’s first three-year phase, patients were tracked to evaluate care, satisfaction and whether the plan achieved savings targets. Based on those results, CMS would decide whether to expand the program to a second phase.

Specifically, the complaint alleges that Healthways Inc failed to disclose that: (i) Healthways Inc was not meeting the savings targets, among other requirements, set by CMS. As a result of Healthways Inc’s failure, CMS would not expand the MHS program to a second phase and Healthways Inc would be required to reimburse CMS for the fees they had already received through the program; (ii) Healthways Inc was in danger of losing at least two existing contracts and was experiencing slower enrollment in an existing contract due to a decline in the need for Healthways Inc’s services; and (iii) as a result of the foregoing, Healthways Inc had no reasonable basis for its revenues and earnings guidance for fiscal 2008.

Then, on February 26, 2008, Healthways Inc announced that it was lowering its financial guidance for fiscal 2008 “due to slower-than-projected enrollment in a new Health Support program with one large health plan customer and the recent indication that two previously anticipated contracts will not materialize during this fiscal year.” Upon this news, shares of Healthways Inc’s stock (NASDAQ: HWAY) fell $13.42 per share, or approximately 30%, to close at $31.93 per share, on heavy trading volume. of the Securities Exchange Act of 1934.

Healthways Inc provides disease management and wellness programs for health plans, hospitals and small businesses, helping members with diabetes, cancer and other diseases to coordinate care, keep up with treatment and maintain healthy behaviors.