CONSHOHOCKEN, Pa., Feb. 8 (UPI) -- A class-action shareholders' suit has been filed against U.S. device maker Cyberonics, the law firm Goldman Scarlato & Karon said Thursday.
The lawsuit was filed in the U.S. District Court for the Southern District of Texas on behalf of persons who purchased or otherwise acquired publicly traded securities of Cyberonics between Feb. 5, 2004, and Aug. 1, 2006.
The complaint alleges that Cyberonics failed to disclose and misrepresented material information known to the company regarding review and approval by the Food and Drug Administration of a new use for the company's Vagus Nerve Stimulation device to treat depression; the marketability of the VNS device and medical insurance payers' coverage decisions for the device, which is Cyberonics' sole product.
The complaint also charges improper conduct related to award of stock-option grants to certain Cyberonics officers.
The lawsuit comes on the heels of disappointing news for Cyberonics Monday, when the Centers for Medicare & Medicaid Services rejected the medical device for coverage on the depression use, due to what the agency said was a lack of clear benefit for patients with depression. Medicare currently reimburses for use of the stimulator for treating epilepsy.
