Updated:February 7, 2019
Status: Ongoing Case
On December 4, 2017, Labaton Sucharow filed a consolidated, amended securities class action complaint on behalf of Amalgamated Bank, as Trustee for the LongView Collective Investment Funds (Amalgamated Bank), against Maximus, Inc. (Maximus or the company), and certain of its senior executives (collectively, the defendants). The action asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and U.S. Securities and Exchange Commission (SEC) Rule 10b-5 promulgated thereunder, on behalf all persons or entities who purchased or otherwise acquired Maximus common stock between February 5, 2015 and February 3, 2016, inclusive (the class period).
The court appointed Amalgamated Bank as the lead plaintiff, and Labaton Sucharow as lead counsel, on November 3, 2017. On January 8, 2018, the defendants filed a motion to dismiss the complaint, which was granted by the court on August 27, 2018. The plaintiffs filed a notice of appeal on September 24, 2018, and the opening appellant brief was filed on December 20, 2018. Defendants' opposition brief was filed on February 7, 2019. Plaintiffs' reply brief will be filed on February 21.
On October 29, 2014, the United Kingdom Department for Work and Pensions awarded Maximus a significant contract to carry out health and disability benefits, called the Health Assessment Advisory Service (HAAS), over a period of three and a half years. The complaint alleges that during the class period, despite encountering problems from the start, the defendants assured investors that Maximus was meeting targets concerning the HAAS contract.
During the class period, the defendants made false and/or misleading statements and/or failed to disclose that: 1) in obtaining the HAAS contract, Maximus set an unattainable target number of healthcare professionals to recruit and an unattainable target number of assessments; 2) throughout the HAAS contract, Maximus was struggling to recruit, train, and ramp-up new health care staff to perform the assessments; 3) the inability to meet its target number of healthcare recruits and target number of assessments meant Maximus would not earn the performance-based incentive fees from the HAAS contract; and 4) consequently, the defendants’ statements about the company, its financial condition, and the outlook for its business, including statements about the HAAS contract and the amount of revenue Maximus expected the contract to contribute, lacked a reasonable basis when made.
Maximus issued a press release on February 4, 2016, announcing its earnings for the first quarter of fiscal year 2016, again missing expectations and confirming its inability to meet HAAS contract assessment targets. The reduced earnings were based in part on weak performance of the HAAS contract, which “tempered operating margin.” On this news, shares of Maximus common stock dropped $5.53 per share over two trading sessions, or 10.5 percent.
The case is In re Maximus, Inc. Securities Litigation, No. 17-cv-00884 (E.D. Va.). Labaton Sucharow represents the lead plaintiff Amalgamated Bank.