CINCINNATI (CN) - A health-care company did not breach its duty to inform its shareholders of allegedly illegal payments to a Tennessee senator, the 6th Circuit ruled.
Gregory Zaluski and six other plaintiffs filed a class action against United American Healthcare Corp. and six individual defendants.
The plaintiffs said UAHC had a duty to disclose the payments to then-Tennessee Sen. John Ford. These payments violated the company's contract with the state of Tennessee, the plaintiffs claimed.
But Judge Cole found that the company did not have a duty to disclose the payments.
In a 2005 press release, UAHC admitted employing Ford as a consultant since 2001. After paying him $420,000 in 42 months, the company then terminated his contract.
The Tennessee Commissioner of Commerce and Insurance placed UAHC under administrative supervision. News of this action caused the company's stock price to plummet from $5.50 per share to $2.11.
Cole ruled that UAHC could not have known this series of events would occur.
"The potential consequences of these payments are the type of predictions and soft information that do not give a duty to disclosure," Cole wrote.
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