Berman Tabacco, as co-lead counsel for Amalgamated Bank, secured a key ruling in its fight for documents concerning whether UnitedHealth overbilled Medicare by millions of dollars over a 12-year period.
Amalgamated Bank and two other institutional investors demanded certain of UnitedHealth’s books and records to investigate the degree to which UnitedHealth’s Board of Directors and officers were involved in or aware of the company’s purportedly illegal actions. Such “books and records” demands are brought under Delaware law and serve as a prudent precursory to a derivate action. The case is In re UnitedHealth Group, Inc. Section 220 Litigation, C.A. No. 2017-0681-TMR (Del. Ch.).
In a February 28, 2017 decision, following extensive briefing and January trial, Vice-Chancellor Tamika Montgomery Reeves of the Delaware Chancery Court ruled in plaintiffs’ favor, finding that plaintiffs’ demand stated “a proper purpose and a credible basis from which a court can infer that wrongdoing or mismanagement may have occurred,” entitling it to inspect certain books and records to investigate its claims. Vice Chancellor Reeves also held that Amalgamated was entitled to rely on pleadings in a separate False Claims Act action to establish a basis for demanding books and records of that corporation.
In ruling that the demand and plaintiffs’ reliance on the separate action were appropriate, the Chancery Court ruled: “Defendant cannot escape the testimony and documents that demonstrate a credible basis for this Court to infer possible wrongdoing or mismanagement simply because they are referenced in a complaint.”
“We are proud of this success,” commented Boston Partner Nathaniel Orenstein. “Going forward, this ruling will be helpful to investors in companies who seek to hold corporate officers and directors accountable for their actions in furthering wrongdoing.”