NEW YORK, Oct. 22, 2002 (PRIMEZONE) -- The law firm of Kirby, McInerney & Squire LLP announces that it has commenced a class action suit on behalf of purchasers of the securities of Kindred Healthcare, Inc. (Nasdaq:KIND) between August 14, 2001 and October 10, 2002 inclusive (the "Class Period"). The action is pending in the United States District Court for the Western District of Kentucky.
A copy of the complaint is available from the Court or from Kirby McInerney & Squire. Please visit our website, which offers summary and detailed information concerning the case at www.kmslaw.com/new_cases/kindred/kindred.htm , or contact us by phone at (888) 529-4787 or by email at washburn@kmslaw.com.
The complaint charges Kindred and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The alleged violations, according to the complaint, stem from materially false and misleading statements made by the defendants during the Class Period that, as detailed below: (i) materially misrepresented Kindred Healthcare's operations and financial state; thereby (ii) causing Kindred Healthcare securities to trade at artificially-inflated prices. When defendants revealed Kindred's true -- and much worse than previously-disclosed -- operational and financial state on October 10, 2002, Kindred's share price quickly deflated, falling over 40% in one day. The suit seeks to return losses suffered by investors who purchased Kindred securities during the class period at inflated prices and who were damaged thereby.
Specifically, the complaint alleges that during the Class Period, defendants issued a series of statements to the public indicating that Kindred was successfully emerging from bankruptcy and implementing a growth plan. To that end, defendants announced an increased credit facility to facilitate acquisitions, and a public offering of Kindred common stock priced at $46 per share. The offering was crucial for Kindred, which had been struggling for months to regain its market capitalization and renewed analyst interest. A successful offering would allow Kindred to resume selling its stock on the Nasdaq National Market System rather than the Over-the-Counter bulletin board, where the stock had been languishing since Kindred's emergence from bankruptcy in April 2001. During the Class Period, defendants reported quarter after quarter of improved financial results and acquisitions. In response, Kindred stock traded at over $45 per share during April 2002.
However, defendants failed to reveal that due to a dramatic increase in professional liability claims, especially in Florida, defendants were not properly reserving for these incurred claims. During May 2001, Florida had enacted reform legislation which became effective October 5, 2001. There was a marked increase in the number of professional liability lawsuits filed in Florida in anticipation of the new law taking effect. Medical liability insurance premiums skyrocketed and certain insurance companies stopped writing medical liability insurance in Florida. As a result, Kindred competitors such as Beverly Enterprises took charges in order to account for the increase in lawsuits. Defendants assured investors and analysts that Kindred (which was largely self-insured) carefully reviewed its reserves for claims on a monthly basis, and would not have to take a large "catch-up" charge since it maintained adequate reserves. Despite defendants' failure to properly maintain reserves for millions of dollars in claims, defendants Kuntz and Lechleiter signed sworn statements on August 13, 2002, affirming the accuracy of Kindred's financial statements and public filings.
On October 10, 2002, after the close of trading, Kindred withdrew its previous earnings projections for 2002 and revised downwards its third quarter 2002 estimates. The shortfall was attributed to increased costs for professional liability claims incurred in fiscal 2001 and 2002 -- specifically, approximately $55 million of additional costs for professional liability claims above its normal provision for the third quarter ended September 30, 2002. Approximately two-thirds of the "dramatic increase in professional liability costs" arose from Kindred's operations in Florida. In response to this news, Kindred's stock price dropped by an astonishing 43%, falling $11.88 per share to close at $15.84.
Plaintiffs are represented by Kirby McInerney & Squire, LLP, which specializes in complex litigation, including securities actions. The firm has repeatedly demonstrated its expertise in this field, and has been recognized by various courts which have appointed the firm to major positions in consolidated and multi-district litigation. The firm's efforts on behalf of shareholders in securities litigation have resulted in recoveries totaling hundreds of millions of dollars, and its achievements and quality of service have been chronicled in numerous published decisions. More information about the firm, representative actions in general or about the role of the lead plaintiff in a securities action can be obtained through Kirby McInerney & Squire's website at http://www.kmslaw.com.
If you invested during the period described above, you may, no later than December 17, 2002, move the Court to serve as lead plaintiff in the litigation, if you so choose, pursuant to the Private Securities Litigation Reform Act of 1995 (the "PSLRA"), 15 U.S.C. section 78u-4(a). A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. Your ability to share in any recovery is not, however, affected by the decision whether or not to seek appointment as a lead plaintiff. For more information about the case, its claims, and your rights, please contact:
Ira M. Press, Esq. Mark Strauss, Esq. Ian Washburn KIRBY McINERNEY & SQUIRE, LLP 830 Third Avenue, 10th Floor New York, New York 10022 Telephone: (212) 317-2300 or Toll Free (888) 529-4787 E-Mail: washburn@kmslaw.com
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca.