Opinion ID: 2976605
Heading Depth: 3
Heading Rank: 3

Heading: UAHC’s Statements in the Press Releases

Text: The April 15 press release explicitly stated that the payments by UAHC to Ford were for consulting work done outside of Tennessee. This is an affirmative misleading statement, as Plaintiffs have submitted sufficient evidence that UAHC was aware of Ford’s actions on UAHC’s behalf within the state of Tennessee through the papers found in Ford’s desk, the statements of other Tennessee legislators, and the whistle-blowing claims of former UAHC workers. However, Plaintiffs do not allege simply that the payment was made, but that the making of the payment created a voidable contract or the possibility of fines and sanctions by the State of Tennessee. Thus, Plaintiffs’ allegation refers to the consequences of the payment, not the payment itself. As stated above, these consequences are the type of predictions and soft information that do not give rise to a duty of disclosure. In re Sofamor Danek, 123 F.3d at 402. And, as above, there is no evidence that, at the time the press release was made, UAHC anticipated that the payments would lead to a termination or modification of its contract with TennCare. See Helwig, 251 F.3d at 554-55; City of Monroe, 399 F.3d at 672. The April 21 press release issued by UAHC acknowledged the receipt of Tennessee’s Notice and Order of Administrative Supervision. It stated that: The notice also asserts that its findings of fact describe potential grounds for termination of the Health Plan’s TennCare contract. Although the Health Plan and UAHC acknowledge that such termination would have a material adverse effect on the companies, the companies do not agree that these findings are accurate. UAHC plans on aggressively defending the Health Plan against these allegations. Compl. ¶ 108. The analysis applied to the April 15 press release applies here as well. Plaintiffs argue that UAHC should have disclosed that the payments constituted breach. Such information goes to the potential consequences of UAHC’s practice, and as in In re Sofamor Danek, UAHC was not required to make such a disclosure. See 123 F.3d at 401-02. Further, the statements made in these press releases can be distinguished from those found to be material by the City of Monroe Court. In City of Monroe, once the company chose to speak regarding an objective fact, “it was required to qualify that representation with known information undermining (or seemingly undermining) the claim.” 399 F.3d at 673. (citing Mayer, 988 F.2d at 639 and In re K-tel Intern, 300 F.3d at 896, 898 (quoting Helwig, 251 F.3d at 561)). This objective fact did not turn on decisions made by external parties, such as whether to fine the company for violations of safety standards, but on a statement that was directly in conflict with data in the company’s possession. In City of Monroe, the defendants issued a statement that “the objective data clearly reinforces our belief that these are high-quality, safe tires”; the defendants in fact had data that indicated the opposite. Id. at 672. In contrast, the complained-of omission in this case is that No. 07-1298 Zaluski, et al. v. United American Healthcare Corp., et al. Page 10 payments made to Ford could have resulted in Tennessee’s decision to void the contract or fine the company. There is no evidence that UAHC believed either of these actions to be forthcoming. We conclude that in this setting, Defendants’ failure to disclose the potential consequences of the payments to Ford, consequences which turn on decisions made by actors outside of Defendants’ control, did not constitute the type of hard information that this Court considers to be actionable. See In re Sofamor Danek, 123 F.3d at 398-401.