Omnicare Securities Suit Heads to Supreme Court
WASHINGTON (CN) - Pharmaceutical care giant Omnicare persuaded the Supreme Court on Monday to review whether investors have adequately pleaded securities claims.
After Omnicare, which is the nation's largest provider of pharmaceutical care services for the elderly and other residents of long-term care facilities in the United States and Canada made its December 2005 public stock offering, investors claimed that there were material misstatements or omissions in a registration statement filed with the Securities and Exchange Commission.
They claimed Omnicare had made kickback arrangements with pharmaceutical manufacturers and had submitted false claims to Medicare and Medicaid, among other illegal activities.
Meanwhile the company's SEC registration statement had stated "that its contracts with drug companies were 'legally and economically valid arrangements that bring value to the healthcare system and patients that we serve,'" according to the complaint (emphasis in original).
A federal judge in Kentucky never certified a class in the 2006 lawsuit and dismissed the complaint in its entirety in 2007.
The 6th Circuit revived the allegations under Section 11 of the Securities Act of 1934 two years later, but the court dismissed the case again in 2012, finding that Section 11 claim "sounds in fraud."
In a partial reversal last year, the federal appeals court revived the allegation that Omnicare's statements of "legal compliance" involved material misstatements and omissions.
The Supreme Court granted Omnicare a writ of certiorari Monday but did not issue any comment on the case, as is its custom.
The Indiana State District Council of Laborers and HOD Carriers Pension and Welfare Fund leads the class action along with the Cement Masons Local 526 Combined Funds and the Laborers District Council Construction Industry Pension Fund.