Investors in Tivity Health Inc. have asked a federal judge in Nashville to approve a $7.5 million settlement deal that would end claims that the health improvement company concealed that one of its most important customers, United Healthcare Inc., was developing a program that would compete with one of Tivity's flagship offerings.
In a brief filed Thursday, lead plaintiff the Oklahoma Firefighters Pension and Retirement System asked U.S. District Judge Chief Judge Waverly D. Crenshaw Jr. for an initial nod on the multimillion dollar deal, noting that the agreement was struck as the matter was "only weeks from trial."
Given the settlement's substantial value and the risks inherent in bringing this complex securities class action to trial and possibly appeal, the settlement represents an excellent result for class members," the investors told Judge Crenshaw.
Tivity investor Eric Weiner launched the action in November 2017. The latest version of the claims alleges that Tivity and three of its executives hid from the public that United Healthcare was developing a fitness program called Optum Fitness Advantage for Medicare patients that is much like Tivity's SilverSneakers fitness program.
The investors allege that Tivity continued to represent that its relationship with United was fine as United was building out its Optum program, despite the fact that revenue from United made up 10% of Tivity's total revenues and that a program like Optum could hurt Tivity's chances of locking down a new contract with United.
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The investors are represented by Steven J. Toll, Daniel S. Sommers, Joshua C. Handelsman, Christina D. Saler and Jessica (Ji Eun) Kim of Cohen Milstein Sellers & Toll PLLC and J. Gerard Stranch IV and Benjamin A. Gastel of Branstetter Stranch & Jennings PLLC.
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