The complaint alleges that the defendants resorted to an illegal scheme to bilk the Medicaid and Medicare programs, the Veterans Administration, and private insurers, in order to meet predicted profit expectations. The company allegedly booked sales improperly by filling out fake prescriptions and adding items that were not prescribed for existing patients in order to increase bills to Medicare and Medicaid. This practice not only artificially inflated Hanger’s revenues and earnings, it also jeopardized Hanger’s status as a Medicare and Medicaid provider, and endangered its relationships with private insurers.

On June 14, 2004, after trading closed, NBC News aired an investigative report in which a Hanger employee described the company’s fraudulent billing practices. The next day, the company issued a news release in which it admitted that it had initiated an investigation into “billing irregularities.” Company shares had opened at $15.75 on June 14, 2004-- they closed out the day at $14.41 and fell to a closing price of $12.75 on June 15, 2004, on heavy trading volume of 2.4 million shares.

If you purchased securities issued by Hanger Orthopedic Group during the applicable period, you may request appointment by the court as a lead plaintiff if you do so by August 23, 2004. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the court must determine that your claim is typical of the claims of other class members, and that you will adequately represent the class. Under certain circumstances, one or more class members may together serve as lead plaintiffs. Your ability to share in any recovery is not affected by the decision whether or not to serve as a lead plaintiff. You may retain any counsel of your choice to serve as you in this action, or you may choose to do nothing, and remain in the class as a silent member.