has agreed to pay $14 million to settle a lawsuit filed last year by shareholders of the beleaguered Chicago company.
The suit, brought as a class action by shareholder Linda Wong, accused then-CEO Mary Tolan and then-CFO John Staton of making false statements about the financial health and business practices of the revenue-cycle management company that inflated its share price before it became embroiled in an investigation by Minnesota authorities in April 2012.
That's when the state's attorney general, Lori Swanson, accused Accretive employees of using aggressive tactics to collect outstanding debt from patients at a Minneapolis health system. The scandal sent the firm's stock, which had been trading near $20, tumbling by 50 percent in the days following the revelation of the allegations.
Shares closed today at $9.06. With about 97.3 million shares outstanding, the settlement amount equates to roughly 14 cents a share.
The settlement agreement was filed yesterday and calls for Accretive to pay $14 million into a settlement fund for a class of defined shareholders. As part of the deal, the company does not admit any wrongdoing.
“Defendants believed at the time and still believe that, during the class period and at all other times, Accretive Health's public statements were truthful, accurate and not misleading, including those statements relating to Accretive Health's business relationships, debt collection and data security and compliance programs,” the settlement states.
The company said in a statement: "Although we strongly believe the claims in the lawsuit were meritless, the settlement serves to underscore our desire to move forward with our business and bring positive change to the healthcare industry.”
Ms. Wong's suit was among at least a half-dozen shareholder suits filed on April 27, two days after Ms. Swanson's allegations appeared in national news reports. Several months later, the Indiana State Police Benefit System was appointed the lead plaintiff in Ms. Wong's suit.
A company whose model was to help hospital clients with billing and collecting
revenue that had already been billed, Accretive to that point was one of the Chicago area's fastest-growing companies. It booked $786.4 million in revenue in 2011, up 33 percent from $592.9 million in the prior year.
The company said this year it must restate some of those results. It still has not released its 2012 financial statements.Accretive Health settles shareholder suit for $14 million originally appeared on the Crain's Chicago Business website.