Franklin, Tenn.-based Acadia Healthcare issued notice of a proposed settlement to resolve shareholder derivative litigation brought on behalf of the company.
The actions were filed in the U.S. District Court for the Middle District of Tennessee and the Delaware Court of Chancery. The federal court granted preliminary approval of the settlement Sept. 1, the company said in a Sept. 25 news release.
Under the settlement, insurers covering Acadia’s directors and officers would pay the company $12 million, and Acadia would adopt corporate governance reforms, according to a Securities and Exchange Commission filing.
The litigation involved allegations that the individual defendants, who are current and former Acadia directors and officers, breached their fiduciary duties, wasted corporate assets and were unjustly enriched in connection with an alleged oversight failure that allowed the company to make misrepresentations about its compliance with applicable laws, patient care and staffing at facilities, and the performance of its United Kingdom operations, according to the release. The actions also alleged that some individual defendants profited from insider trading in company stock, and the federal case alleged violations of the Securities Exchange Act of 1934.
Acadia and the individual defendants deny all allegations of wrongdoing or liability, according to the filing.
A settlement hearing is scheduled for 1:30 p.m. Dec. 10 in the U.S. District Court for the Middle District of Tennessee. The court will consider whether to approve the settlement and enter a final judgment.
The court will also consider $4.75 million in plaintiffs’ attorneys’ fees and expenses, which Acadia agreed to pay based on the monetary and corporate governance benefits the settlement confers on the company. Any requested service awards, capped at $5,000 per plaintiff, would be paid from that amount.
Acadia stockholders who held shares as of July 31, still hold them and want to object to the proposed settlement must file their objections with the court and deliver copies to plaintiffs’ and defendants’ counsel by Nov. 26.
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