LOUISVILLE, Ky. - A federal judge on dismissed a class-action securities fraud lawsuit against Humana Tuesday, saying the health care giant properly cautioned investors about the possibility of a drop in stock prices.
U.S. District Judge Joseph H. McKinley said five individual stockholders, the Alaska Laborers Employers Retirement Fund and a private investment firm cannot hold the company liable for their losses.
Humana stockholder Dominic Capuano sued the company in 2008, asking to be compensated for stock prices that went down shortly after he purchased 200 shares. The other plaintiffs joined Capuano's lawsuit.
Attorneys for Capuano did not immediately return messages on Tuesday.
Humana spokesman Jim Turner said, "We have long believed that we acted properly with respect to disclosures to our shareholders, and this decision confirms our belief."
Capuano claimed company executives intentionally gave shareholders and the public misleading forecasts about Humana's financial prospects before restating the first-quarter and full-year earnings estimates on March 12. Making those claims and knowing a restatement was coming is a securities law violation, Capuano claimed.
Capuano sought to cover anyone who bought Humana stock between Feb. 4 and March 11, 2008. Capuano bought 200 shares at $50 each on March 11. Shares dropped more than 13 percent in trading on March 12.
At the time, Humana said its lower earnings projections were due to "actuarial assumptions" in its bids submitted to the government, which laid out Medicare benefits and premiums that took effect for its members on Jan. 1, 2008.
McKinley found that Humana used "cautionary language" and "expressly identified" multiple factors that could affect future earnings by the company.
"This cautionary language warned of risks similar to those that ultimately led Humana to revise its earnings guidance downward on March 12, 2008," McKinley wrote.
McKinley also found nothing in the lawsuit to back the claim that Humana's corporate officers misled investors during a Feb. 4, 2008, teleconference.