Shareholders sue Drkoop.com over disclosure

A law firm in Boston files a shareholder lawsuit against the online health site, the latest legal skirmish for the embattled company.

2 min read
A Boston-based law firm announced today that it has filed a shareholder lawsuit against Drkoop.com, the latest legal skirmish for the embattled online health site.

Berman DeValerio & Pease said in a statement that it had filed suit on behalf of shareholders who bought stock in Drkoop this spring. The suit charges that the Austin, Texas-based company misled shareholders by delaying the disclosure of a negative report that questioned the company's viability.

"Despite its auditor's concern about the company's continuing viability, Drkoop.com issued a series of positive statements regarding its financial results, without disclosing the existence of the auditor's qualification," the law firm charged in a statement.

Representatives for Berman DeValerio & Pease did not return calls. Drkoop spokeswoman Stephanie Elsea declined to comment on the latest suit or on any of the other shareholder suits facing the company.

The lawsuit follows two similar suits that were filed against the company last month. The suits are only one leg of a marathon of bad news for Drkoop.

Just yesterday, Virginia-based MillenniumHealth called off its merger talks with Drkoop. Last month, the company warned investors that it would post a greater than expected second-quarter loss.

The company also announced that chief operating officer Dennis Upah and chief financial officer Susan Georgen-Saad resigned. Earlier this year, Drkoop laid off about 35 percent of its staff. In April, the company warned it had only enough cash to last until about September.

This spring, Drkoop's auditor, PricewaterhouseCoopers, issued a report that raised "substantial doubt about its ability to continue as a going concern." Although PricewaterhouseCoopers submitted its report Feb. 15, the lawsuit charges that Drkoop didn't reveal the report until March 30, when the company filed its annual report with the Securities and Exchange Commission.

Berman DeValerio & Pease did not disclose how much it was seeking in damages.