Omnicare, America's largest pharmaceutical provider for the elderly, was just trying to conduct business as usual. The company released a standard press statement in August 2005 saying it was working to adopt a new government program--Medicare Part D--and did not foresee any problems. A short time later, CEO Joel Gemunder said he felt confident the forthcoming transition would not harm the company.
But Omnicare did not properly educate its drug-plan suppliers on pharmacy care practices and ran into database problems related to the program. These errors cost the company $9.8 million during the switch to Plan D.
The 6th Circuit described the strategy as "alchemy," and Kurzweil says the plaintiffs' actions contradicted Congress' intent with the Securities and Exchange Act.
Mayer Brown Partner Timothy Bishop adds that the law does not require corporations to have perfect foresight when making public statements.