Shoemaker v. Cardiovascular Systems, Inc.
Status: Ongoing Case
On April 26, 2016, Labaton Sucharow was appointed co-lead counsel in this securities fraud class action against Cardiovascular Systems, Inc., and two of its executives on behalf of all purchasers of Cardiovascular Systems, Inc. securities from September 12, 2011 through January 21, 2016. Cardiovascular Systems, Inc. is a manufacturer of medical devices for the treatment of peripheral and coronary arterial diseases.
The lead plaintiff filed an amended complaint on June 27, 2017. The complaint alleges that the defendants made materially misleading statements and omissions by failing to disclose that the company relied upon illegal kickbacks, off-label promotions, and other violations of applicable laws and regulations in order to drive sales of its products.
The markets began to learn that something was amiss at the company on May 9, 2014, when it was disclosed that the Department of Justice (DOJ) was investigating the company “to determine whether the Company has violated the False Claims Act, resulting in the submission of false claims to federal and state health care programs, including Medicare and Medicaid.” As revelations of the company’s allegedly illegal sales tactics came to light, the price of the company’s stock plunged from a class period high of $40.98 per share on April 9, 2015, to $8.75 per share on January 22, 2016, a decline of nearly 80 percent and a market capitalization decline of nearly one billion dollars.
On June 28, 2016, the company reached a settlement with the DOJ. In connection with that settlement, the company paid $8 million and entered into a Corporate Integrity Agreement to prevent the illegal activities alleged in the complaint.
The case is Shoemaker v. Cardiovascular Systems, Inc., No. 16-cv-00568 (D. Minn.). The lead plaintiffs are Norfolk County Retirement System, Wayne County Employees’ Retirement System, and City of Miami Fire Fighters’ & Police Officers’ Retirement Trust.