The Indiana State District Council of Laborers and Hod Carriers Pension and Welfare Fund, which purchased Omnicare shares during the six-month period between August 3, 2005 and January 27, 2006, filed the federal court case in Kentucky, the Cincinnati Post reported. In addition to the company, the suit also names CEO Joel Gemunder and CFO David Froesel Jr. as defendants.
The suit alleges that Omnicare made false and misleading statements that led to inflated prices for the stock, which went as high as $61.85 per share during the period.
According to the lawsuit, Omnicare withheld from investors information that it was improperly substituting generic drugs, was not in compliance with Medicare regulations, and that new Medicare prescription drug regulations had dramatically increased costs and the number of rejected claims.
The suit also said the company withheld that it was not “well-positioned” to add value for shareholders under the new Medicare regulations.
Omnicare officials declined comment other than to release a one-sentence response: “The company believes that the lawsuit is completely without merit and will defend against it vigorously.”