This is a securities fraud class action filed on behalf of all investors who purchased or otherwise acquired Tactile Systems Technology, Inc. (“Tactile” or the “Company”) securities between May 7, 2018 and June 8, 2020, inclusive (the “Class Period”), seeking remedies under the Securities Exchange Act of 1934.
Headquartered in Minneapolis, Minnesota, Tactile is a medical technology company that develops and provides medical devices for the at home treatment of lymphedema and venous insufficiency. A material portion of Tactile’s annual revenues come in the form of reimbursement from public third party payers, such as Medicare, the Veterans Administration and certain Medicaid programs in the United States. Accordingly, Tactile’s compliance with applicable federal and state rules and public payer regulations is critical to the Company’s success.
The complaint alleges that throughout the Class Period, Defendants misrepresented and concealed that: (1) while Tactile publicly touted a $4 plus billion or $5 plus billion market opportunity, in truth, the total addressable market for Tactile’s medical devices was materially smaller; (2) to induce sales growth and share gains, Tactile and/or its employees were engaged in illicit and illegal sales and marketing activities in violation of applicable federal and state rules and public payer regulations; (3) the foregoing illicit and illegal sales and marketing activities increased the risk of a Medicare audit of Tactile’s claims and criminal and civil liability; (4) Tactile’s revenues were in part the product of unlawful conduct and thus unsustainable; and that as a result of the foregoing, (5) Defendants’ public statements, including its year-over-year revenue growth and the purported growth drivers, were materially false and misleading at all relevant times.
On March 20, 2019, the truth began to emerge when an amended federal Qui Tam complaint filed against Tactile by one of the Company’s competitors was unsealed. Though Defendants had previously characterized the suit as lacking merit to investors, the complaint – made available to the public for the first time – contained detailed allegations of illegal sales practices on the part of Tactile, causing the Company to submit fraudulent claims to Medicare and the VA. On this news, the price of Tactile shares fell $4.53 per share over the next two trading days, or 7.5%.
Then, on February 21, 2020, the court issued an order in the Qui Tam Action, denying Tactile’s motion to dismiss the Qui Tam complaint in its entirety. On this news, the price of Tactile’s shares fell $6.65 per share over the course of a single trading day, or 10.59%.
Finally, on June 8, 2020, research firm OSS Research published a scathing report about the Company entitled “Strong Sell on Tactile Systems: Bloated Stock Needs Compression Therapy,” accusing Tactile of (1) overstating its total addressable market (TAM) by nearly $4.7 billion, (2) using a "daisy-chaining" kickback scheme "that has resulted in rampant overprescribing and rapid market share gains at the expense of patients, insurers and the public,” and (3) concealing Medicare audits resulting in denials, for failure to establish medical necessity, of a whopping 71% of Tactile's submitted claims. On this news, the Company’s stock price fell $6.05, or 11.69%.
On September 29, 2020, after conducting an extensive proprietary investigation, Hagens Berman filed a class action complaint against Defendants.
If you are a Tactile investor or may assist the firm’s investigation, click here to discuss your legal rights with Hagens Berman.
Lead Plaintiff Process: The Private Securities Litigation Reform Act of 1995 permits any investor who purchased TCMD securities during the Class Period to seek appointment as lead plaintiff. A lead plaintiff acts on behalf of all other class members in directing the litigation. The lead plaintiff can select a law firm of its choice. An investor’s ability to share in any potential future recovery is not dependent upon serving as lead plaintiff. If you wish to serve as Lead Plaintiff for the Class, you must file a motion with the Court no later than Nov. 30, 2020, which is the first business day on which the U.S. District Court for the District of Minnesota is open that is 60 days after the publication date of Sept. 29, 2020. Any member of the proposed Class may move the Court to serve as Lead Plaintiff through counsel of their choice. Members may also choose to do nothing and remain part of the proposed Class.