In re Shoemaker v. Cardiovascular Systems, Inc. Securities Litigation
|Court:||United States District, District of Minnesota|
|Judge:||Hon. Donovan Frank|
|Class Period:||09/12/2011 - 01/21/2016|
|Case Contacts:||Jeremy P. Robinson,|
This is a securities class action filed on behalf of all persons who purchased Cardiovascular Systems, Inc. (“CSI” or the “Company”) common stock between September 12, 2011 and January 21, 2016, inclusive (the “Class Period”), seeking to pursue remedies under the Securities Exchange Act of 1934 (the “Exchange Act”).
Cardiovascular Systems is a medical device company that develops and manufactures medical devices for the treatment of peripheral and coronary arterial diseases. The Company operates in a highly-regulated environment which governs the allowable uses of its medical devices, and prohibits the use of kickbacks and bribes to medical professionals to drive sales of such devices.
Throughout the Class Period, Cardiovascular Systems falsely touted the Company’s Code of Ethics and compliance with the law, and that the Company had a policy not to offer or accept kickbacks, bribes, or gifts of substantial value. Contrary to these representations, Defendants knew or recklessly disregarded that the Company was engaged in the illegal and improper off-label marketing of its medical devices, and that Cardiovascular Systems engaged in an illegal kickback scheme to promote its devices to healthcare professionals.
On July 15, 2013, a former Cardiovascular Systems sales manager initiated an action pursuant to the qui tam provisions of the Federal Civil False Claims Act alleging that since at least as early as 2010, the Company has been engaged in an illegal kickback and off-label marketing scheme. The kickbacks included: free all-expense-paid training programs followed by explicit demands by Company employees that attendees use company products; free product to induce the purchase of other product; and sham Speaker Bureau payments for high-prescribers, among other things. With regard to Cardiovascular Systems’ off-label marketing, the Qui Tam Action asserts that the Company promoted its devices for use with a smaller sized catheter than approved and promoted its devices for use in areas of the body and disease states for which the devices lacked FDA-approval.
On May 9, 2014, the Company disclosed that it had received a letter from the U.S. Attorney’s Office for the Western District of North Carolina stating that it is investigating the Company to determine whether the Company has violated the False Claims Act. On this news, the price of the Company’s stock dropped $1.62 per share, or nearly 6%, from a close of $29.05 per share on May 9, 2014, to close at $27.43 per share on May 12, 2014.
On April 29, 2015, the Company issued a press release disclosing its fiscal third quarter 2015 financial results and reported a net loss of $10.7 million, which the Company attempted to attribute to the Company’s sales force optimization efforts. This news caused the price Cardiovascular Systems’ stock to decline $3.52 per share, or more than 10%, from a close of $34.82 per share on April 29, 2015, to close at $31.30 per share on April 30, 2015. The Company continued to report disappointing earnings during the Class Period as a result of Cardiovascular Systems’ purported sales force issues, which caused the price of the Company’s stock to drop.
Finally, on January 21, 2016, the Company issued a press release disclosing its fiscal second quarter 2016 financial results. Therein, the Company reported revenue of just $41.4 million, below the Company’s prior revenue guidance of between $42.5 million and $44.0 million. The Company again attempted to attribute the guidance miss to the continued effects of the sales force transition. On this news, the price of Company’s shares declined $3.72 per share, or nearly 30%, from a close of $12.46 per share on January 21, 2016, to close at $8.74 per share on January 22, 2016.
On April 26, 2016, BLB&G client the City of Miami Fire Fighters’ & Police Officers’ Retirement Trust was appointed Co-Lead Plaintiff in the Cardiovascular Systems securities class action. Lead Plaintiffs filed the First Amended Class Action Complaint on June 27, 2017, completed briefing on motion to dismiss on 10/16/2017, and the Court held oral argument on the motion on December 15, 2017.
Other Cases of Interest
- SMART Technologies, Inc.
Southern District of New York Hannah Ross, Jeremy P. Robinson
- Citigroup, Inc.
Southern District of New York John C. Browne, David Wales, John Rizio-Hamilton, Benjamin Galdston, Jeremy P. Robinson
- Allergan, Inc. (Proxy Violation)
Central District of California Mark Lebovitch, Jeremy P. Robinson, Michael D. Blatchley, Richard D. Gluck, Edward G. Timlin
- Refco, Inc.
Southern District of New York John C. Browne, Salvatore J. Graziano, Jeremy P. Robinson
- Popular, Inc.
District of Puerto Rico Salvatore J. Graziano, Jeremy P. Robinson,
- Cliffs Natural Resources Inc.
Northern District of Ohio James A. Harrod, Jeremy P. Robinson, Rebecca E. Boon, Adam Hollander
- BNY Mellon Corp. Forex Transactions Litigation
Southern District of New York John C. Browne, Jeremy P. Robinson
- Anadarko Petroleum Corporation
Southern District of Texas John C. Browne, Jeremy P. Robinson
- WellCare Health Plans, Inc.
Middle District of Florida John Rizio-Hamilton, Jeremy P. Robinson,