District Of Colorado Denies Motion To Dismiss Securities Class Action Against Executives Of Healthcare Services Company

On August 7, 2026, Judge Gordon P. Gallagher of the United States District Court for the District of Colorado denied a motion to dismiss a putative securities fraud class action against three executives of a healthcare services company (the “Company”), alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. Skrypski v. Sampson, et al., No. 1:25-cv-00306 (D. Colo. Aug. 7, 2026). In denying the motion to dismiss, the Court held that plaintiff adequately pled that defendants’ risk disclosures regarding the Company’s accounts receivables were materially misleading because the alleged risks had already materialized, which was allegedly known by defendants at the time of the alleged misstatements and caused investor losses when the truth was purportedly revealed. 

According to the operative complaint, the Company coordinates and manages non-emergency medical transportation for individual “members,” and is paid primarily by those members’ insurers. Plaintiff alleged that utilization of the Company’s services fell during the COVID-19 pandemic, and that because most of the Company’s contracts were “full risk,” the Company received a fee per member irrespective of utilization, causing its profits to soar. Plaintiff alleged that as pandemic stay-at-home restrictions eased, the Company renegotiated those full-risk contracts into “shared-risk” contracts in anticipation of higher utilization, a strategy the Company’s CEO allegedly touted as a “win-win.” Plaintiff alleged, however, that the shift instead produced significant disputes with payors over services rendered, leading to collectability issues and a cash crunch, while defendants allegedly continued to assure investors that the Company was performing well. Despite this, plaintiff alleged that investors learned of these issues only through a series of partial disclosures beginning in May 2023, culminating in September 2024 when the Company reported that it had experienced delays collecting on its contracts—which plaintiff alleged caused the Company’s stock price to fall.

In denying the motion to dismiss, the Court first addressed whether defendants’ challenged statements were materially misleading, focusing on the risk disclosures in the Company’s Form 10-K and Form 10-Q filings. In the annual reports, defendants allegedly identified delays in collection or non-collection of accounts receivable as a risk that could adversely affect the Company’s financial condition and cash flows, and in three quarterly reports, defendants stated that the Company’s risks “remain[ed] current in all material aspects” and had not materially changed. Plaintiff alleged that these statements were misleading because the risks had already materialized by the time they were disclosed. Crediting confidential witness allegations that payor disputes were recurring and escalating from 2022 onward—and were a standing agenda item at monthly leadership meetings—in addition to allegations that the Company was experiencing alleged declines in cash flow and alleged increases in contract receivables, the Court held that the identified risk was already occurring when the filings were made. In so holding, the Court reasoned that cautionary language could not insulate the issuer from liability for failing to disclose that a risk has already materialized.

Turning to the issue of scienter, the Court held that the same factual allegations supported an inference that defendants knew the identified risks had materialized. The Court credited allegations that the CFO of the non-emergency medical transport portion of the Company, who is one of the defendants, allegedly attended weekly negotiation calls regarding delayed collection and non-collections throughout 2023, and that receivable disputes were allegedly “definitely a hot topic” raised “month after month” at monthly leadership meetings. The Court further observed that, before the class period began, the Company’s CEO, also a defendant, allegedly touted his direct involvement in contract negotiations and close relationships with payors’ executives, indicating that he knew or should have known that payors were disputing their payment obligations. The Court therefore found a strong inference of scienter as to the risk disclosures.

The Court next addressed the issue of loss causation, rejecting defendants’ argument that five alleged partial corrective disclosures did not reveal new information or correct any alleged misstatement. The Court emphasized that, as defendants themselves acknowledged, the alleged disclosures “reveal issues with collections,” which related back to the challenged risk disclosures concerning delayed collections and non-collection. The Court reviewed the alleged disclosures—an August 2023 disclosure of a “temporary timing mismatch between payments and collections,” a February 2024 disclosure of an unrecouped payment and negative cash flow, and September 2024 filings disclosing delays in the timely collection of approximately $60 million—along with the Company’s stock price declines, and concluded that plaintiff adequately alleged that defendants “continued to paint a rosy picture” while knowing the Company was in “precarious financial straits.” Accordingly, the Court held that plaintiff adequately pleaded economic loss and causation.

Having found that plaintiff adequately alleged a primary violation under Section 10(b), the Court likewise held that plaintiff adequately pled Section 20(a) control person liability claims.