Tactile Systems Technology, Inc. Class Action Lawsuit
- Company Name
- Tactile Systems Technology, Inc.
- Stock Symbol
- Class Period
- May 7, 2018 to June 8, 2020
- District of Minnesota
The Tactile Systems Technology, Inc. class action lawsuit charges Tactile Systems and certain of its executives with violations of the Securities Exchange Act of 1934 and seeks to represent purchasers or acquirers of Tactile Systems securities between May 7, 2018 and June 8, 2020, inclusive (the “Class Period”). The Tactile Systems class action lawsuit was commenced on September 29, 2020 in the District of Minnesota and is captioned Mart v. Tactile Systems Technology, Inc., No. 20-cv-02074.
Tactile Systems is a medical technology company engaged in developing and providing medical devices for the treatment of chronic diseases at home. Among other devices, Tactile Systems manufactures and distributes the Flexitouch and Entre Systems, pneumatic compression devices (“PCDs”) that help control symptoms of lymphedema, a chronic and progressive medical condition that is often an unintended consequence of cancer treatment. Given its dependence on third-party public payers, Tactile Systems’ compliance with applicable federal and state rules and regulations is critical to Tactile Systems’ success.
The Tactile Systems class action lawsuit alleges that during the Class Period defendants made false and/or misleading statements and/or failed to disclose that: (1) while Tactile Systems publicly touted a $4 plus billion or $5 plus billion market opportunity, in truth, the total addressable market for Tactile Systems’ PCDs was materially smaller; (2) to induce sales growth and share gains, Tactile Systems and/or its employees were engaged in illicit sales and marketing activities in violation of applicable federal and state rules and public payer regulations; (3) the foregoing illicit sales and marketing activities increased the risk of a Medicare audit of Tactile Systems’ claims and criminal and civil liability; (4) Tactile Systems’ revenues were in part the product of unlawful conduct and thus unsustainable; and that as a result of the foregoing, (5) defendants’ public statements, including Tactile Systems’ year-over-year revenue growth, the purported growth drivers, and the effectiveness of Tactile Systems’ internal controls over financial reporting were materially false and misleading at all relevant times.
On March 20, 2019, an amended federal qui tam complaint filed against Tactile Systems was unsealed, accusing Tactile Systems of illegally paying hospital staff to induce physicians to prescribe its medical devices. The qui tam complaint further alleged that Tactile Systems had violated the federal anti-kickback statute by paying physicians to be “advisors” and “paid spokesmen” when these financial relationships were merely a way to secure those doctors’ business. Securities analysts covering Tactile Systems then released detailed reports summarizing the qui tam complaint’s allegations and identifying correspondent risks. On this news, the price of Tactile Systems shares fell more than 7.5% from March 20, 2019 to March 22, 2019.
Then, on February 21, 2020, the court issued an order in the qui tam action, denying Tactile Systems’ motion to dismiss in its entirety. On this news, the price of Tactile Systems shares fell more than 10% from February 21, 2020 to February 24, 2020.
Finally, on June 8, 2020, research firm OSS Research published a scathing report accusing Tactile Systems of (1) overstating its total addressable market by nearly $4.7 billion, (2) using a “‘daisy-chaining kickback scheme’ that has resulted in rampant overprescribing and rapid market share gains at the expense of patients, insurers and the public,” and (3) concealing Medicare audits resulting in denials, for failure to establish medical necessity, of a whopping 71% of Tactile Systems’ submitted claims. On this news, Tactile Systems’ stock price fell more than 11% from June 8, 2020 to June 9, 2020, further damaging investors.
Robbins Geller Rudman & Dowd LLP is one of the world’s leading law firms representing investors in securities class action litigation. With 200 lawyers in 9 offices, Robbins Geller has obtained many of the largest securities class action recoveries in history. For seven consecutive years, ISS Securities Class Action Services has ranked the Firm in its annual SCAS Top 50 Report as one of the top law firms in the world in both amount recovered for shareholders and total number of class action settlements. Robbins Geller attorneys have helped shape the securities laws and have recovered tens of billions of dollars on behalf of aggrieved victims. Beyond securing financial recoveries for defrauded investors, Robbins Geller also specializes in implementing corporate governance reforms, helping to improve the financial markets for investors worldwide. Robbins Geller attorneys are consistently recognized by courts, professional organizations and the media as leading lawyers in the industry.