Health Insurance Innovations, Inc. (HIIQ) Accused of Misleading Investors
According to the complaint for alleged breaches of fiduciary duties and gross mismanagement, Health Insurance Innovation, Inc. (HIIQ) filed its Florida third-party administrator (“TPA”) application in July 2016, which HIIQ needed to operate its core business. While HIIQ was in its application process, the company was under investigation for allegedly fraudulent business practices in 42 states. HIIQ’s Florida TPA application was denied in June 2017, due to material errors and omissions, including the omission that two of its officers had been named in lawsuits “involving dishonesty, breach of trust or a financial dispute.” HIIQ concealed the denial until it filed its August 4, 2017 Form 10-Q, which failed to disclose the necessity of obtaining a TPA license and deliberately understated the potentially devastating consequences the denial would have on company operations. Then, in September 2017, Seeking Alpha released an article revealing the disastrous “domino effect” the TPA denial caused, including loss of additional licenses. On this news, the share price declined by 37%, closing at $19.75, and has yet to recover.
