Psychiatric Solutions, Inc.
Psychiatric Solutions, Inc. Securities Settlement
The lawsuit was settled for $65 million in cash on October 10, 2014. The following is a summary of the proceedings in the lawsuit: ‘This is a federal securities class action brought on behalf of all Persons who purchased or otherwise acquired the securities of PSI during the Class Period. Lead Plaintiff alleges that Defendants violated Â§Â§10(b) and 20(a) of the Securities Exchange Act of 1934 (Exchange Act) by engaging in a fraudulent course of conduct that misled investors about PSI growth and operations of its facilities; made false and misleading statements about the quality of its facilities, the treatment of its patients and the impact of regulatory violations; and materially understated loss reserves for malpractice claims brought against the Company. Lead Plaintiff alleged that this course of conduct and these materially false and misleading statements caused PSI securities to trade at artificially inflated prices. Defendants deny that they violated the securities laws. The initial complaint in the Litigation was filed in the Court on September 21, 2009. The operative complaint in the Litigation is the Consolidated Complaint for Violation of the Federal Securities Laws, filed on June 15, 2010 (the Complaint). On July 15, 2010, Defendants moved to dismiss the Complaint. Lead Plaintiff filed an opposition to Defendants motion to dismiss on August 19, 2010, and Defendants filed their reply brief on September 24, 2010. By Order dated March 31, 2011, the Court denied Defendants motion to dismiss the Complaint. Defendants filed a motion to reconsider that ruling (or, in the alternative, the certification to the Sixth Circuit Court of Appeals, pursuant to Â§1292(b)), which motion was opposed by Lead Plaintiff. The Court denied the motion on August 15, 2011, and set deadlines for fact and expert discovery, as well as other pre-trial events. Lead Plaintiff filed its motion for class certification on September 15, 2011. Defendants took discovery from the proposed Class Representative, and filed their opposition to the motion for class certification on October 31, 2011. Lead Plaintiff filed its reply to the motion for class certification on November 16, 2011, and on March 29, 2012, the Court issued an order granting class certification and appointing Lead Plaintiff as Class Representative and its choice of counsel as Lead Counsel. On April 12, 2012, Defendants petitioned the Sixth Circuit Court of Appeals seeking leave to appeal the Court class certification order. Lead Plaintiff filed its opposition to Defendants petition on April 26, 2012, and on May 25, 2012, the Sixth Circuit denied Defendants petition and upheld the class certification order. Notice of the pendency of this Litigation was provided to Class Members in April and May 2012. The parties conducted extensive fact discovery from August 2011 through April 2014. On April 18, 2014, Defendants filed their motion for summary judgment, and Lead Plaintiff filed its opposition to the motion on May 16, 2014. Defendants filed their reply brief on May 30, 2014. The motion was pending at the time this Settlement was reached. Concurrently, the parties exchanged expert reports and responses from January to June 2014. Expert discovery was completed at the end of June 2014. Briefing on motions to exclude expert testimony was completed by July 2014. These motions were also pending at the time of this Settlement. Trial in the Litigation was scheduled to begin on September 16, 2014. The parties attended formal mediation sessions before the Hon. Layn R. Phillips (Ret.) in February 2012 and February 2013, but were unable to resolve the Litigation during those sessions, and the parties proceeded towards trial. With the assistance of Judge Phillips, the parties continued their negotiations, and on the morning of September 5, 2014, Judge Phillips presented the parties with a Mediator Proposal, which was ultimately accepted by both parties. Following additional negotiations, the parties reached an agreement to resolve the Litigation on the specific terms set forth in the Stipulation of Settlement, and summarized herein.’