Robbins Geller Beats Back Motion to Dismiss in Envision Healthcare Securities Case
On November 20, 2019, the Honorable William L. Campbell, Jr. of the United States District Court for the Middle District of Tennessee largely denied defendants’ motion to dismiss in In re Envision Healthcare Corp. Securities Litigation, a case alleging that defendants violated the Securities Act of 1933 and the Securities Exchange Act of 1934. Laborers Pension Trust Fund for Northern California and Laborers’ International Union of North America National (Industrial) Fund are serving as lead plaintiff, with Central Laborers’ Pension Fund and United Food and Commercial Workers Union Local 655 Food Employers Joint Pension Fund named as additional plaintiffs in the action.
Envision provides health care services in the United States, including surgery, pharmacy, medical imaging, emergency care, and other related health care services. EmCare Holdings, Inc. (“EmCare”), which provides outsourced facility-based physician services, is one of the company’s primary operating subsidiaries. The complaint alleges that throughout the class period, defendants made materially false and misleading statements and/or failed to disclose adverse information regarding the company’s business and operations, including that EmCare routinely arranged for patients who sought treatment at in-network facilities to be treated by out-of-network physicians, billing these patients at higher rates than if the patients had received treatment from in-network physicians. As a consequence, Envision’s statements attributing EmCare’s class period growth to other factors were false and/or misleading, and the company’s revenues from EmCare were likely to be unsustainable when this conduct was revealed. As a result, Envision securities traded at artificially inflated prices, with its stock price reaching a high of more than $130 per share during the class period.
In largely denying defendants’ motion, the court stated that “[p]laintiffs have sufficiently alleged facts that raise a plausible inference that out-of-network billing was a significant source of revenue,” and “sufficiently pleaded that statements in Envision’s quarterly and annual filings could be viewed as misleading for failure to include out-of-network billing as a basis for revenue growth.”
In re Envision Healthcare Corp. Sec. Litig., No. 3:17-cv-01112, Memorandum (M.D. Tenn. Nov. 20, 2019).
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