The U.S. Court of Appeals for the Second Circuit (the "Second Circuit") affirmed a lower court's dismissal of a shareholder's lawsuit alleging that a health insurer and its executives misled investors regarding compliance with Medicare regulations.
The plaintiffs alleged that certain statements made by Cigna Corporation ("Cigna") about its regulatory compliance efforts were "materially misleading" and constituted fraud pursuant to the Exchange Act because Cigna was not in compliance with its regulatory requirements at the time the statements were made. The U.S. District Court ruled that the purported misstatements were not materially misleading, and granted Cigna's Motion to Dismiss the case.
The Second Circuit characterized the allegedly misleading statements as "tentative and generic" and a "textbook example of 'puffery.'" The Court also noted that the disclosures at issue included statements that highlighted the complex regulatory environment Cigna was facing. As a result, the Second Circuit concluded, a reasonable investor would not rely on the statements as representations of satisfactory compliance and, therefore, the statements were not materially misleading.
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