BIRMINGHAM, Ala., Aug. 16, 2016 /PRNewswire/ -- An Alabama Circuit Court Judge granted final approval on Monday to a $310-million class action settlement that seeks to rectify a fraud committed on more than 20,000 individuals, entities and pension plans who owned stock in MedPartners, Inc., in the late 1990s.
This settlement is one of the largest fraud recoveries in Alabama legal history. The lawsuit claims that Birmingham-based MedPartners, Inc., a physician practice management company once led by former HealthSouth CEO Richard Scrushy, lied to its shareholders about how much the company could pay to settle securities-fraud lawsuits in 1999. The plaintiffs serving as representatives of the class are Mr. Sam Johnson of Birmingham and the City of Birmingham Retirement and Relief System.
MedPartners changed its name in 2000 to Caremark Rx and merged with CVS Health in 2007.
"This case is the extraordinarily rare one in which Class Counsel both detected the wrong-doing and then single-handedly enforced the law," said a leading national expert on class action law. Retained by class counsel to provide his opinion to the Court on counsel's request for attorneys' fees, he noted that Class Counsel achieved these "stunning results" despite litigating "against some of the largest corporations in the world."
Jefferson County Ala., Circuit Judge Pat Ballard presided over the case and issued an order on August 15, 2016, granting final Court approval to the $310-million settlement.
"This class has waited patiently for more than 12 years for their investment losses to be recovered," said Scott Powell, attorney at Hare, Wynn, Newell & Newton and lead counsel for the class. "They were victims of MedPartners stock fraud in the 90s and then were further cheated by the companies' hiding of its unlimited insurance policy. Sam Johnson and the City of Birmingham Retirement and Relief System tirelessly served this class for which we all are very grateful."
The class is made up of more than 20,000 investors who purchased MedPartners securities from 1996-1998.
Legal counsel for the class are Scott Powell (Lead Counsel), John Haley, Ralph Cook, Bruce McKee, Brian Vines and Tempe Smith of Hare, Wynn, Newell & Newton, LLP; (www.hwnn.com), John Somerville of Somerville, LLC; and Tim Francis of Francis Law, LLC.
More than 20 securities-fraud lawsuits were filed by investors in 1998 against MedPartners. Those lawsuits alleged that MedPartners made false and misleading statements to the public about its financial condition and prospects. The lawsuits were combined and settled in 1999 for $56 million after MedPartners and its insurer, AIG, claimed MedPartners was teetering on the edge of bankruptcy and that $56 million exhausted the limits of its insurance coverage.
In 2003, a new class action lawsuit was filed against MedPartners (Caremark) and AIG for not disclosing the true fact that in 1999, AIG provided unlimited insurance coverage to MedPartners for the 1998 securities-fraud lawsuits. This claim alleged that Caremark and AIG committed fraud in the 1999 settlement.
A trial was set to begin in early 2016, but was postponed and both sides worked out a settlement. Under the terms of the settlement, the defendant AIG insurance companies will pay $230 million and Caremark (a subsidiary of CVS Health) will pay $80 million.
SOURCE Hare, Wynn, Newell & Newton