Summary of the Lawsuit
This lawsuit, Harrison v. Envision Management Holding, Inc. Board of Directors, et al., is brought on behalf of participants and beneficiaries of the Envision Management Holding, Inc. Employee Stock Ownership Plan (“ESOP”). The lawsuit alleges that numerous violations of the Employee Retirement Income Security Act (“ERISA”) occurred in connection with the sale of Envision Management Holding, Inc. to the ESOP at an inflated price, which caused a multi-million-dollar loss to the ESOP.
The Complaint alleges that the “Sellers” – the original owners of Envision Management Holding, Inc. (“Envision” or the “Company”) as well as Argent Trust Company (which served as the trustee to the ESOP), breached their fiduciary duties to the ESOP participants and engaged in prohibited transactions in connection with the sale of Envision company stock to the newly created Envision Management Holding, Inc. Employee Stock Ownership Plan (“Envision ESOP” or “ESOP”) in 2017.
The Sellers are top executives of Envision, a company that operates radiology and diagnostic centers in four states. The Sellers owned 100% of Envision until December of 2017. At that time, the Sellers created the Envision ESOP - a retirement plan for their employees - to purchase Envision. The Complaint alleges that Defendants handpicked the trustee, who was supposed to represent the employees’ interests, and set up the transaction in a way that allowed the Sellers to keep control over the Company. The Complaint alleges that the employees whose retirement accounts purchased the Envision stock were not allowed to negotiate the terms of the deal, including the price they paid for Envision stock. In fact, employees only learned about the deal after it was completed.
Ultimately, the ESOP purchased 100% of Envision Management Holding, Inc. for $163.7 million dollars from the Sellers. According to Department of Labor filings, the ESOP paid $1,770 per share for 64% of the Envision shares and $1,404 per share for 36% of the Envision shares. However, there is no clear reason for the discrepancy in price; based on this disparity alone, the lawsuit alleges that the ESOP overpaid by at least $23.4 million for the Envision stock. A few months after the ESOP’s purchase of Envision stock, Department of Labor filings indicate that all shares—regardless of their initial price—were valued at $349 per share.
Defendants in the case were fiduciaries to the ESOP, and the law required them to act in the best interests of the employee-participants. Instead of fulfilling these duties, the Complaint alleges that the Defendants caused the ESOP to pay inflated values for the Envision stock. This lawsuit seeks to restore to the ESOP the amount it overpaid for Envision stock and to disgorge all ill-gotten profits Defendants obtained in the ESOP Transaction.
The lawsuit is brought on behalf of all participants in and beneficiaries of the Envision Management Holding, Inc. Employee Stock Ownership Plan from September 1, 2017 or any time thereafter who vested under the terms of the ESOP. The case arises out of the sale of 100% of the stock of the Envision Management Holding, Inc. to the Envision ESOP for approximately $163.7 million.
The Envision ESOP covers employees of Envision Management Holding, Inc. who are vested in the Envision ESOP, and those participants’ beneficiaries. Excluded from the Class are Defendants and their immediate families, any fiduciary of the ESOP, the officers and directors of Envision (including any of its subsidiaries or affiliates), or of any entity in which a Defendant has a controlling interest; and legal representatives, successors, and assigns of any such excluded persons.
Status of the Litigation
Plaintiff filed his Complaint, Harrison v. Envision Management Holding, Inc. Boards of Directors, et al., on January 29, 2021 in the United States District Court for the District of Colorado. On July 6, 2021, the case was reassigned to the Honorable Judge Regina M. Rodriguez. The case is pending before Judge Rodriguez.
On March 24, 2022, the court denied Defendants' motion to compel arbitration. Defendants appealed the decision to the U.S. Court of Appeals for the Tenth Circuit. On February 9, 2023, A three-judge panel in a 41-page published opinion sided with the workers' argument — backed up by the U.S. Department of Labor, which participated as amicus on behalf of workers in the case — that an arbitration provision tucked in Envision workers' ESOP plan documents impermissibly blocked remedies under ERISA. That triggered the so-called effective vindication doctrine under the Federal Arbitration Act, which permits a court to overrule an arbitration agreement if it blocks a party from being able to bring claims under federal law.
On July 7, 2023, Defendants filed a petition for a writ of certiorari before the Supreme Court of the United States. On October 10, 2023, the Supreme Court denied the request to review the Tenth Circuit’s decision thereby leaving the decision intact.
As of October 10, 2023, Parties are in active discovery, which is scheduled to end on April 3, 2024. Defendants also filed a Motion to Dismiss the case on August 28, 2023, which Plaintiffs responded to in opposition on October 6, 2023.
Whom to Contact for More Information
If you are a participant in the Envision ESOP, or if you have information which might assist us in the prosecution of these allegations, please contact:
Caroline Bressman, Esq. (email)
Ryan Wheeler, Esq. (email)
Jillian Pincus, Paralegal (email)
Cohen Milstein Sellers & Toll PLLC
1100 New York Avenue, N.W., Suite 500
Washington, D.C. 20005
Telephone: 888-240-0775 (Toll Free) or 202-408-4600