Lawsuit: Envision Investors Blinded to ‘Illicit Business Practices,’ Financial Disappointments

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A stockholder has filed suit against Envision Healthcare Corporation and 11 of its executives over claims that they published misleading statements about the source of their earnings, artificially inflated the company’s stock price, overestimated their financial projections, and caused investors to suffer losses when the truth was revealed.

The complaint claims Envision concealed from the public that its financial success was due to “illicit business practices,” such as ordering unnecessary tests, admitting patients into the hospital “for financial rather than medical reasons,” choosing the most expensive treatments in “unwarranted situations,” and overcharging patients by arranging for them to be treated by out-of-network doctors when they visited in-network facilities. On July 24, 2017, however, The New York Times reportedly published an article about Envision titled “The Company Behind Many Surprise Emergency Room Bills,” in which it revealed these alleged practices to the public. This news, the complaint says, caused the company's stock prices to drop 3.72 percent.

Shortly thereafter, according to the complaint, the defendants announced certain organizational changes at the executive level, resulting in an additional stock price drop of “nearly 10%.”

The suit also notes that in 2015, stock prices reportedly fell over 24 percent after Envision directors admitted in a financial report that the company’s performance for that quarter “fell short of [their] expectations.”

The plaintiff claims the defendants’ misrepresentations of their business practices and financial prospects caused stock prices to be artificially inflated between March 2, 2015 and September 18, 2017, only to significantly fall when the truth was eventually revealed.