On January 12, 2022, the Honorable Eduardo C. Robreno of the Eastern District of Pennsylvania granted final approval to a $16.8 million settlement of a securities fraud class action brought by Berman Tabacco on behalf of its client against Healthcare Services Group Inc. (“HCSG”) and certain of its current and former officers. Berman Tabacco is sole Lead Counsel representing a state public pension fund in the class action suit.
HCSG is one of the largest providers of housekeeping, laundry, and dietary services to hospitals and other healthcare organizations. The action alleged that, during the class period, defendants issued materially false and misleading statements and failed to disclose “earnings management” practices that allowed HCSG to consistently meet or beat earnings per share (“EPS”) estimates, which, in turn, caused the price of the company’s stock to be artificially inflated. In addition, the action alleges that HCSG and defendants failed to disclose the existence of an ongoing SEC investigation into the Company’s EPS practices.
In a 33-page Memorandum approving all aspects of the settlement, Judge Robreno concluded that it was “clear” that each of the Rule 23(e) factors governing class action settlements supported approval of the settlement and that additional considerations established by the Third Circuit further favored approval of the settlement. The Court also found that the overall fairness of the settlement was underscored by the fact that, as Lead Counsel, Berman Tabacco had satisfied a “heightened standard … designed to ensure that class counsel has demonstrated sustained advocacy throughout the course of the proceedings and has protected the interests of all class members.”
The settlement will provide relief to a class of investors that purchased HCSG common stock from April 14, 2014 through February 9, 2021. For more information on the settlement or claims process, please see HCSGSecuritiesLitigation.com.
“We are very happy that the Court approved the settlement of this hard-fought litigation and we are proud to have worked alongside our client to obtain this result for them and other HCSG investors,” commented Berman Tabacco partner Patrick T. Egan.
The case is Utah Retirement Systems v. Healthcare Services Group, Inc., et al., No. 2:19-CV-01227-ER (E.D. Pa.). The litigation team includes Patrick T. Egan and Steven J. Buttacavoli from Berman Tabacco’s Boston office and Nicole Lavallee and Jeffrey V. Rocha from the firm’s San Francisco office.