HMS Holdings Corp. agreed to pay $20 million to settle a lawsuit related to the acquisition of fraud detection company Allied Management Group Special Investigation Unit Inc.
The lawsuit, pending in the Supreme Court of New York, is related to the earn-out portion of the purchase price for Allied Management Group.
HMS Holdings paid the settlement amount from available cash and will record a charge in the second quarter. The company, which provides cost containment solutions in the U.S. healthcare marketplace, added that the charge will not impact its adjusted EPS or meaningfully change its overall liquidity profile.
The settlement reduces a 2017 jury award that granted $60 million in damages to plaintiffs Dennis Demetre and Lori Lewis, who alleged breach of contract by HMS Holdings.
HMS Holdings acquired AMG in 2010 for a purchase price of $26.2 million, comprised of $13 million in cash and additional payments of $13.2 million subject to future financial performance.