Public Employees' Retirement System v. Amedisys, Inc.
769 F.3d 313
| 5th Cir. | 2014Background
- Amedisys, a public home-health company, relied heavily on Medicare PPS reimbursements (≈90% of 2005–2009 receipts).
- During 2005–2007 the PPS had thresholds; in 2008 it changed to six, fourteen, and twenty visits to trigger higher payments.
- PERSM alleges Defendants pressured employees to provide medically unnecessary visits to hit lucrative thresholds.
- Five public disclosures allegedly revealed the fraud: Citron Report (Aug 2008), resignations (Sept 2009), WSJ article (Apr 2010), SFC/SEC/DOJ investigations (mid-2010), and disappointing Q2 2010 earnings.
- The district court dismissed the case for failure to plead loss causation; on appeal, the Fifth Circuit reversed, holding loss causation adequately alleged when viewed collectively and remanding for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether partial disclosures can plead loss causation | PERSM—collective partial disclosures suffice | Amedisys—no single partial disclosure suffices | Yes; collectively they plead loss causation |
| What constitutes a corrective disclosure in pleading loss causation | Corrective disclosure can be gradual or from multiple sources | Must be a direct, definitive revelation of fraud | Corrective disclosure can be cumulative or from multiple sources and need not be a single event |
| Whether government investigations alone can be corrective disclosures | Investigations, with other disclosures, can reveal the fraud | Investigations alone do not constitute corrective disclosure | When viewed with other disclosures, investigations can contribute to corrective disclosure |
| Standard of review for loss causation at pleading stage | Dura and Lormand justify liberal pleading | Tightly require actual fraud | De Novo review; pleading suffices under corresponding standards |
Key Cases Cited
- Lormand v. U.S. Unwired, Inc., 565 F.3d 228 (5th Cir.2009) (proximate causation requires a link between truth emergence and price drop)
- Dura Pharmaceuticals, Inc. v. Broudo, 544 U.S. 336 (U.S. 2005) (loss causation requires a causal connection; inflated price alone insufficient)
- FindWhat Investor Group v. FindWhat.com, 658 F.3d 1282 (11th Cir.2011) (corrective disclosure can be demonstrated circumstantially)
- Spitzberg v. Houston American Energy Corp., 758 F.3d 676 (5th Cir.2014) (test for relevant truth; corrective disclosure can be broader than exact misstatement)
- In re Bristol-Myers Squibb Co. Sec. Litig., 586 F. Supp. 2d 148 (S.D.N.Y.2008) (no single form of corrective disclosure required; disclosure exposure critical)