SAN DIEGO & IRVINE, Calif.--(BUSINESS WIRE)--Shareholder rights law firm Robbins Arroyo LLP announces that a shareholder derivative complaint was filed on behalf of HCP, Inc. (NYSE: HCP) in the U.S. District Court for the Northern District of Ohio, Western Division. The complaint is brought against certain officers and directors of HCP for alleged breaches of fiduciary duty and violations of the Securities Exchange Act of 1934 from March 30, 2015 through the present. 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-apr-17
HCP Accused of Covering Up Its Client's Billing Fraud Practices
According to the complaint, HCP was highly dependent on ManorCare, a nursing home operator that served as HCP's most significant client. Specifically, 30% of HCP's revenue was derived from its leases with ManorCare and 40% of HCP's real estate assets were subject to long-term leases with ManorCare. HCP touted 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." However, according to the complaint, 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. 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 as a result of ManorCare's billing fraud, ManorCare's reported revenue and earnings were false and its consolidated statements did not comply with Generally Accepted Accounting Principles. 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 Leonid Kandinov at (800) 350-6003, LKandinov@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.