Health Insurance Innovations, Inc.

Case Details

Class Period: September 25, 2017 - April 11, 2019
Date Filed: Feb 18, 2019
Case Number: 8:19-cv-00421
Jurisdiction: Middle District of Florida

Case Summary

On November 27, 2018, Aurelius Value published a report stating, among other things, that “[p]reviously sealed documents gathered by the FTC directly undermine management’s claims and prove that a large boiler room operation recently shuttered by the government for a massive alleged fraud was responsible for roughly half of HIIQ’s sales. Evidence also suggests that HIIQ policies have been contaminated by insurance fraud and reveal that other HIIQ brokers prey on consumers with falsehoods.” On this news, shares of HIIQ fell $1.93 per share, or over 5.8%, on November 27, 2018, thereby damaging investors. The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that a substantial portion of the Company’s revenues were derived from third parties; (2) that these third parties used deceptive tactics to sell the Company’s policies, including overstating the policy’s coverage and/or selling under the licenses of employees who had no involvement in the underlying sales; (3) that regulatory scrutiny of these third parties would materially impact the Company’s operations; and (4) that, as a result of the foregoing, Defendants positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.

On May 13, 2019, the Oklahoma Municipal Retirement Fund and the City of Birmingham Retirement and Relief System were appointed Lead Plaintiffs.  Lead Plaintiffs filed a Consolidated Class Action Complaint on July 19, 2019.  Defendants filed a motion to dismiss the complaint on August 28, 2019, an Lead Plaintiff filed an opposition on October 7, 2019. On October 28, 2019, Defendants filed their Reply in Support to Motion to Dismiss.  The Court denied the Motion to Dismiss on November 4, 2019, and the case is now in discovery.