On June8, 2020, analyst OSS Research published a scathing report concerning Tactile Systems Technology, Inc. (NASDAQ: TCMD) entitled “Strong Sell on Tactile Systems: Bloated Stock Needs Compression Therapy.” OSS accused Tactile Systems of using a “daisy-chaining kickback scheme that resulted in rampant overprescribing and rapid market share gains at the expense of patients, insurers and the public.” OSS further reported that “Medicare has launched an audit, and the data reveals Tactile has been found non-complaint on 71% of its claims.” These revelations led Tactile Systems common stock to fall by approximately 10%.
A lawsuit has been filed against Tactile Systems and certain of its executives alleging violation of the federal securities laws. According to the lawsuit, the OSS Report is just the most recent development calling into question the Company’s alleged misconduct. On March 20, 2019, an amended federal qui tam complaint that was filed against Tactile Systems by one of its competitors was unsealed, which contained detailed allegations of illegal sales practices on the part of Tactile Systems. This led to the submission of fraudulent claims to Medicare and the VA. Then on February 21, 2020, the Court issued an order in that action denying Tactile System’s motion to dismiss in its entirety.