Indiana Public Retirement System v. Inspire Medical Systems, Inc.

This is a securities class action lawsuit filed against Inspire Medical Systems, Inc. (“Inspire” or the “Company”) and certain of its current and former senior executives (collectively, “Defendants”). The action asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. §§ 78j(b) and 78t(a), and Rule 10b-5 promulgated thereunder, 17 C.F.R. § 240.10b-5, on behalf of investors who purchased or otherwise acquired Inspire common stock between November 4, 2024, and May 4, 2026, inclusive (the “Class Period”).

Inspire is a medical device company that derives primarily all its revenue from the sale of a single product: a surgically implanted device that treats obstructive sleep apnea by stimulating the hypoglossal nerve. During the Class Period, Inspire undertook what Defendant Timothy P. Herbert, the Company's founder, President, CEO, and Chairman, described as “the largest launch in the history of the company”—the commercial rollout of the fifth generation of that device, Inspire V.  The Amended Complaint (“Complaint”) alleges that, during the Class Period, Defendants violated provisions of the Exchange Act by making material misrepresentations and omissions concerning the commercial launch of the Inspire V.

Two things were critical to the success of the Inspire V’s launch: (1) the adoption by healthcare providers of SleepSync, a software platform that Inspire bundled with Inspire V and that providers were required to install before they could activate the new device; and (2) the availability of insurance reimbursement under a Current Procedural Terminology (“CPT”) code that would compensate providers at rates sufficient to incentivize rapid adoption.

As Inspire rushed toward a full commercial launch of Inspire V in May 2025, Defendants Herbert, former Chief Financial Officer Richard J. Buchholz, and Chief Strategy and Growth Officer Carlton W. Weatherby repeatedly misrepresented the status of providers’ adoption of SleepSync. On earnings calls and at investor conferences, Defendants told investors that “feedback” from providers regarding the SleepSync programmer was “promising,” “very, very strong,” and “very good”; that the transition to SleepSync “should not be that difficult” and was “a standard process”; and that SleepSync adoption was “not really the key challenge” to the Inspire V launch. Analysts credited these assurances. Defendants further represented that Inspire had “secured positive coverage policies” from “all” (or “virtually all”) “large national commercial insurers” and obtained coverage from “all seven” Medicare Administrative Contractors (“MACs”). Defendant Herbert further stated that CPT code 64568 “accurately describes” and “appropriately reflects” the Inspire V implantation procedure, that “the insurance companies are on board” with 64568, and that the Company was “ready to throw the switch” for a full launch using that code.

In truth, the SleepSync software was riddled with deficiencies and security vulnerabilities, and healthcare providers were hesitant to install it and were delaying its adoption by many months due to widespread concerns about information security and the risk of noncompliance with the Health Insurance Portability and Accountability Act (“HIPAA”). Further, the CPT code 64568 was not the correct code for Inspire V. The Complaint alleges Defendants selected the more lucrative code 64568 because it maximized reimbursement rates and accelerated provider adoption, even though they knew the code was incorrect.

Investors learned the truth through a series of disclosures beginning on August 4, 2025, when Inspire disclosed that non-adoption of SleepSync and issues with CPT code 64568 were the two “predominant” “headwinds” to the Inspire V launch, and slashed its 2025 diluted net income per share guidance by between 78.2% to 81.8%. Inspire's stock price plummeted $42.04 per share (32.35%) the next trading day and another $9.46 (10.7%) the following day.

Additional disclosures followed. On September 3, 2025, Defendant Weatherby acknowledged that SleepSync adoption continued to be a headwind, and Inspire’s stock fell another $8.91 (9.4%). Beginning in December 2025, disclosures originating from third parties revealed that Inspire’s use of CPT code 64568 was under “review” by, and then repudiated by, the MACs and the Centers for Medicare & Medicaid Services (“CMS”). On December 15, 2025, The Capitol Forum reported that at least three MACs were reviewing the code, causing an 8.73% stock decline. On December 18, 2025, after two MACs formally removed the code from their coverage policies—one stating it had been “added in error”—Inspire’s stock dropped another 19.4%. On January 22, 2026, CMS itself confirmed that code 64568 had been “incorrectly added,” triggering a further 15.99% decline, and on February 11, 2026, Defendants were forced to acknowledge that Medicare claims for Inspire V must use the less lucrative code 64582-52, causing another 12.55% drop. On March 17, 2026, Defendants disclosed continued reimbursement “challenges,” including “confusion” about coding and delayed procedures, and the stock fell another 6.32%. Finally, on May 4, 2026, Defendants revealed that the American Hospital Association had advised its members to use the unlisted code 64999 to bill private insurers for Inspire V procedures, and in response, Inspire’s stock declined another 12.01%.

The action is now proceeding in the U.S. District Court for the District of Minnesota under the caption In re Inspire Medical Systems, Inc. Securities Litigation, Civil Action No. 0:26-cv-02790-NEB-DJF. Indiana Public Retirement System is the Lead Plaintiff and Bernstein Litowitz Berger & Grossmann LLP is serving as Lead Counsel for the class. Lead Plaintiff filed the Complaint on July 30, 2026.