Robbins Arroyo LLP: HCP, Inc. (HCP) Misled Shareholders According to a Recently Filed Class Action
July 12 2016 - 7:23PM
Business Wire
Shareholder rights law firm Robbins Arroyo LLP announces that a
class action complaint was filed against HCP, Inc. (NYSE: HCP) in
the U.S. District Court for the Central District of California. The
complaint is brought on behalf of all purchasers of HCP securities
between March 30, 2015 and February 8, 2016, for alleged violations
of the Securities Exchange Act of 1934 by HCP's officers and
directors. HCP is an independent hybrid real estate investment
trust.
View this information on the law firm's Shareholder Rights Blog:
www.robbinsarroyo.com/shareholders-rights-blog/hcp-inc-july-2016
HCP Accused of Covering Up Its Client's Billing Fraud
Practices
According to the complaint, throughout the class period, HCP was
highly dependent on ManorCare, a nursing home operator that served
as HCP's most significant client. ManorCare's operations and
business were critically important to HCP and its investors, as HCP
had purchased substantially all of ManorCare's real estate
facilities and took a 10% equity stake in ManorCare, with 30% of
HCP's revenue derived from its leases with ManorCare. Furthermore,
40% of HCP's real estate assets were subject to long-term leases
with ManorCare. HCP represented to investors that ManorCare was a
reliable "partner," stating that ManorCare had "a long history of
compliance with regulations" and that ManorCare's billing practices
were "to the standard one would want." HCP also stated that its
assets and revenue stream from its leases with ManorCare were
secure and unimpaired.
However, according to the complaint, these representations could
not be further from the truth, as HCP officials were allegedly
aware that ManorCare was engaged in rampant billing fraud,
generating over $6 billion in false claims for "reimbursement"
submitted to government programs. To ensure it would receive the
highest possible reimbursement rate from Medicare, ManorCare
submitted false claims for reimbursement for therapeutic services
that did not meet the requisite criteria. Specifically, ManorCare
allegedly forced patients to remain in therapy for longer than
necessary and subjected patients to harmful treatment. ManorCare's
billing fraud subjected it to three whistleblower lawsuits and an
investigation by the U.S. Department of Justice ("DOJ"), which
intervened in the whistleblower lawsuits.
The complaint alleges that HCP officials hid from investors that
ManorCare was engaging in billing fraud in violation of federal and
state laws, and as a result, ManorCare's reported revenue and
earnings were false, and its consolidated statements did not comply
with Generally Accepted Accounting Principles. In addition,
ManorCare's billing fraud and the DOJ action put HCP's revenue
stream from its ManorCare leases in jeopardy, and called into
question the value of HCP's equity stake in ManorCare. Even after
the whistleblower actions and DOJ action were revealed, ManorCare
and HCP denied that any wrongdoing had occurred. HCP revealed the
truth in a series of corrective disclosures, stating that it had
recorded two impairment charges totaling $505 million involving
ManorCare. On February 9, 2016, HCP disclosed that its equity stake
in ManorCare had been written down to zero, revealing it could no
longer rely on ManorCare to pay its rent, and noting high legal
costs incurred by ManorCare in defending against the whistleblower
and DOJ lawsuits. On this news, HCP stock dropped 17% to close at
$28.33 per share on February 9, 2016.
HCP Shareholders Have Legal Options
Concerned shareholders who would like more information about
their rights and potential remedies can contact attorney Darnell R.
Donahue at (800) 350-6003, DDonahue@robbinsarroyo.com, or via the
shareholder information form on the firm's website.
Robbins Arroyo LLP is a nationally recognized leader in
shareholder rights law. The firm represents individual and
institutional investors in shareholder derivative and securities
class action lawsuits, and has helped its clients realize more than
$1 billion of value for themselves and the companies in which they
have invested.
Attorney Advertising. Past results do not guarantee a similar
outcome.
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version on businesswire.com: http://www.businesswire.com/news/home/20160712006760/en/
Robbins Arroyo LLPDarnell R. Donahue619-525-3990 or Toll Free
800-350-6003DDonahue@robbinsarroyo.comwww.robbinsarroyo.com
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