What changed in this filing

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Item 3. Legal Proceedings

2021-02-18 compared with 2020-03-02 · 63 added, 72 removed, 54 unchanged (71% of the section changed)

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We are involved from time to time in various claims and legal actions arising in the ordinary course of business.

As previously reported, in April 2017, the Civil Division of the United States Attorney’s Office for the Southern District of New York (the “SDNY”) informed BioReference that it believes that, from 2006 to the present, BioReference had, in violation of the False Claims Act, improperly billed Medicare and TRICARE (both are federal government healthcare programs) for clinical laboratory services provided to hospital inpatient beneficiaries at certain hospitals.

In April 2019, the SDNY also informed BioReference that it believes that BioReference provided physicians subsidies for electronic health record systems prior to 2012 that violated regulations adopted by HHS in 2006 which allowed laboratories to provide these donations under certain conditions.

BioReference is assessing the allegations made by the SDNY and continues to discuss such matters with the SDNY.

As previously disclosed, on September 7, 2018, the Securities and Exchange Commission (“SEC”) filed a lawsuit in the Southern District of New York (the “SEC Complaint” or “SEC Lawsuit”) against a number of individuals and entities (the “Defendants”), including the Company and its CEO and Chairman, Phillip Frost (“Dr.

The SEC Complaint alleged, among other things, that the Company (i) aided and abetted an illegal “pump and dump” scheme perpetrated by a number of the Defendants, and (ii) failed to file required Schedules 13D or 13G with the SEC.

On December 27, 2018, the Company announced that the Company and Dr.

Frost entered into settlement agreements with the SEC, resolving the SEC Complaint.

Pursuant to the settlement, and without admitting or denying any of the allegations of the Complaint, the Company is enjoined from violating Section 13(d) of the Exchange Act and paid a $100,000 penalty.

Liability under Section 13(d) can be established without any showing of wrongful intent or negligence.

The settlement was approved by the Court in January 2019.

Under the terms of the settlement between the SEC and Dr.

Frost, and without admitting or denying any of the allegations in the Complaint, Dr.

Frost agreed to injunctions from violations of Sections 5(a) and (c) and 17(a)(2) of the Securities Act, claims which may be satisfied by strict liability and negligence, respectively, and Section 13(d) of the Exchange Act, also a strict liability claim;

to pay approximately $5.5 million in penalty, disgorgement and pre-judgment interest, which has been paid;

and to be prohibited, with certain exceptions, from trading in penny stocks.

As previously disclosed, on September 7, 2018, the Securities and Exchange Commission (“SEC”) filed a lawsuit in the Southern District of New York (the “SEC Complaint” or “SEC Lawsuit”) against a number of individuals and entities, including the Company and its CEO and Chairman, Phillip Frost (“Dr.

Frost”), alleging violations of securities laws.

The Company entered into a settlement agreement with the SEC on December 27, 2018, pursuant to which, without admitting or denying any of the allegations of the SEC Complaint, the Company is enjoined from violating Section 13(d) of the Exchange Act and paid a $100,000 penalty.

Following the SEC’s announcement of the SEC Complaint, a number of class actions and derivative suits were filed concerning the allegations in the SEC Complaint and related matters.

On June 26, 2020, The Amitim Funds, the lead plaintiff in the class action lawsuits filed a Stipulation of Settlement in the Southern District of Florida of behalf of itself and the remainder of the class, which, if approved, will provide for the settlement of and release of the class action claims for an aggregate of $16.5 million, a significant portion of which has been paid into escrow by our insurance carriers.

On September 4, 2020, an Order Preliminarily Approving Settlement was entered and a settlement hearing was held on December 15, 2020.

We are awaiting the Court’s final order approving the settlement.

Additional information on the class action lawsuits is provided below.

On November 2, 2020, the derivative suit was settled in the Delaware Chancery Court for an aggregate amount of $3.1 million (the “Settlement”).

Several derivative lawsuits that were filed in Florida State and federal courts were stayed pending the resolution of the Delaware derivative action and all of those matters have now been dismissed.

The specific information relating to each lawsuit is provided below.

On or about September 12, 2018, Jason Kerznowski (“Kerznowski”), a purported stockholder, filed a putative class action lawsuit in the United States District Court for the District of New Jersey against the Company and certain of its current and former executive officers (the “Kerznowski Lawsuit”).

This lawsuit was brought by Kerznowski both individually and on behalf of a putative class of the Company’s stockholders, claiming that in connection with the facts and circumstances underlying the allegations in the SEC Complaint, the Company engaged in fraudulent conduct and made false and misleading statements of material fact or omitted to state material facts necessary to make the statements made not misleading.

This lawsuit was brought by Kerznowski both individually and on behalf of a putative class of the Company’s stockholders, claiming that in connection with the facts and circumstances

underlying the allegations in the SEC Complaint, the Company engaged in fraudulent conduct and made false and misleading statements of material fact or omitted to state material facts necessary to make the statements made not misleading.

The Kerznowski Lawsuit sought to declare the action to be a class action and certify Kerznowski as the class representative, monetary damages, including prejudgment and post judgment interest, an award of reasonable attorneys’ fees, expert fees, and other costs, and such other relief as the Court may deem just and proper.

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On May 3, 2019, plaintiffs in each of the Kerznowski Lawsuit and Steinberg Lawsuit, filed an identical consolidated class action complaint, and the Court consolidated these actions on May 8, 2019.

The Company believes the action is without merit and has filed a motion to dismiss the consolidated complaint, which is fully briefed and remains pending.

In addition to the Steinberg and Kerznowski Lawsuits, three other class action lawsuits relating to the allegations of the SEC Complaint were filed against the Company, but have been either administratively stayed and closed, or voluntarily dismissed without prejudice.

On May 29, 2020, the parties informed the Court they had reached a settlement in principle, settling the class action suit for $16.5 million, subject to certain terms and conditions, and the Court issued an Order on Notice of Settlement denying all pending motions as moot and administratively closing the case.

On September 4, 2020, an Order Preliminarily Approving Settlement was entered and a settlement hearing was held on December 15, 2020.

We are awaiting the Court’s final order approving the settlement.

On or about September 13, 2018, Idan Sharon filed an Application for Approval of a Class Action in the Tel Aviv Israel District Court against the Company and certain of its current and former executive officers, and certain members of its Board of Directors (the “Sharon Claim”).

This application was filed by a purported stockholder, both individually and on behalf of a putative class of the Company’s stockholders, claiming that in connection with the facts and circumstances underlying the allegations in the SEC Complaint, the Company engaged in fraudulent conduct and made false and misleading statements of material fact or omitted to state material facts necessary to make the statements made not misleading.

The Sharon Claim seeks to declare the action to be a class action and monetary damages.

The Sharon Claim seeks both to declare the action a class action and monetary damages.

The Court closed this case pending resolution of the U.S.-based class actions relating to the allegations in the SEC Complaint.

The Court has ordered plaintiff’s counsel to update the court with respect to whether there has been a ruling in the U.S.

class action matter by February 17, 2021.

On or about September 16, 2018, Dalia Avraham filed an Application for Approval of a Class Action in the Tel Aviv Israel District Court against the Company and Dr.

This application was filed by a purported stockholder, both individually and on behalf of a putative class of the Company’s stockholders (the “Avraham Claim”).

The Avraham Claim alleges a negligent and/or deliberate act related to the trade of the Company’s shares on the Tel Aviv Stock Exchange (“TASE”) which was intended to or which in fact caused damage to the Company’s investors based on the Company’s decision to delist from TASE in April 2018 and its subsequent decision to continue to be listed on TASE.

The Avraham Claim seeks to declare the action to be a class action and an estimated NIS 20 million (approximately USD $6.1 million) in damages.

The parties have been asked to submit dates for a hearing on a motion to dismiss.

We believe that this action is without merit and the Company intends to vigorously defend itself.

On October 2, 2018 Andy Yu (“Yu”), a purported stockholder, filed a shareholder derivative complaint in the United States District Court for the Southern District of Florida against the Company as a nominal defendant, certain of the Company’s current and former executive officers, certain current and former members of its Board of Directors, and Frost Gamma Investments Trust (the “Yu Lawsuit”).

The Yu Lawsuit alleges violations of the federal securities laws based on alleged false and misleading statements of material fact or omissions, breach of fiduciary duty based on the allegations raised by the SEC in the SEC Complaint, and unjust enrichment.

Yu seeks to maintain the action on behalf of the Company, alleging that he is a proper and adequate representative of the Company, and also seeks to direct the Company to improve its corporate governance and internal procedures, monetary damages, restitution, an award of reasonable attorneys’ fees and expert fees and other costs, and such additional or different relief as the Court may deem just and proper.

This matter is currently stayed pending resolution of the Steinberg Lawsuit.

On October 31, 2018, Lisette Demetriades (“Demetriades”), a purported stockholder, filed a shareholder derivative complaint in the United States District Court for the Southern District of Florida against the Company as a nominal defendant, certain of the Company’s current and former executive officers, certain current and former members of its Board of Directors, and Frost Gamma Investment Trust (the “Demetriades Lawsuit”).

The Demetriades Lawsuit alleges violations of the federal securities laws based on alleged false and misleading statements of material fact or omissions, breach of fiduciary duty based on the allegations raised by the SEC in the SEC Complaint, and unjust enrichment.

Demetriades seeks to maintain the action on behalf of the Company, alleging that he is a proper and adequate representative of the Company, and also seeks to direct the Company to improve its corporate governance and internal procedures, monetary damages, restitution, an award of reasonable attorneys’ fees and expert fees and other costs, and such additional or different relief as the Court may deem just and proper.

This matter is currently stayed and administratively closed pending resolution of the Steinberg Lawsuit.

The Yu Lawsuit alleged violations of the federal securities laws based on alleged false and misleading statements of material fact or omissions, breach of fiduciary duty based on the allegations raised by the SEC in the SEC Complaint, and unjust enrichment.

Yu sought to maintain the action on behalf of the Company, alleging that he was a proper and adequate representative of the Company, and also sought to direct the Company to improve its corporate governance and internal procedures, monetary damages, restitution, an award of reasonable attorneys’ fees and expert fees and other costs, and such additional or different relief as the Court may deem just and proper.

Following the Settlement, the Yu Lawsuit was dismissed with prejudice on January 13, 2021.

and Frost Gamma Investment Trust (the “Demetriades Lawsuit”).

The Demetriades Lawsuit alleged violations of the federal securities laws based on alleged false and misleading statements of material fact or omissions, breach of fiduciary duty based on the allegations raised by the SEC in the SEC Complaint, and unjust enrichment.

Demetriades sought to maintain the action on behalf of the Company, and alleged that he was a proper and adequate representative of the Company, and also sought to direct the Company to improve its corporate governance and internal procedures, monetary damages, restitution, an award of reasonable attorneys’ fees and expert fees and other costs, and such additional or different relief as the Court may deem just and proper.

Following the Settlement, a Joint Stipulation for Dismissal with Prejudice was filed on January 5, 2021 and the Demetriades Lawsuit was dismissed.

On September 27, 2018, Frank Lipsius (“Lipsius”), a purported stockholder, filed a shareholder derivative complaint in the Circuit Court of the Eleventh Judicial Circuit in and for Miami-Dade County, Florida against the Company as a nominal defendant, certain of the Company’s current and former executive officers, and members of its Board of Directors (the “Lipsius Lawsuit”).

This lawsuit was brought by Lipsius and alleges breach of fiduciary duty against the officers and directors named therein, based on the allegations raised by the SEC in the SEC Lawsuit that the Company made misleading statements, and based on a purported failure to maintain proper internal controls.

Lipsius seeks maintain the action on behalf of the Company alleging that he is a proper and adequate representative of the Company, and also seeks to direct the Company to improve its corporate governance and internal procedures, monetary damages, restitution, an award of reasonable attorneys’ fees and expert fees and other costs, and such additional or different relief as the Court may deem just and proper.

The trial court denied defendants’ motion to stay this action, pending the resolution of related class action and derivative matters in federal and Delaware state court.

However, the Third District Court of Appeal quashed the trial court’s order denying the stay, finding that

the action should be stayed pending resolution of the related actions.

Lipsius filed a notice to invoke the discretionary jurisdiction of the Florida Supreme Court to review the Third District Court’s order.

The Florida Supreme Court declined further review of the Lipsius decision by the Third District Court in February 2020.

This lawsuit was brought by Lipsius and alleged breach of fiduciary duty against the officers and directors named therein, based on the allegations raised by the SEC in the SEC Lawsuit that the Company made misleading statements, and based on a purported failure to maintain proper internal controls.

Lipsius sought to maintain the action on behalf of the Company, alleged that he is a proper and adequate representative of the Company, and also sought to direct the Company to improve its corporate governance and internal procedures, monetary damages, restitution, an award of reasonable attorneys’ fees and expert fees and other costs, and such additional or different relief as the Court may deem just and proper.

Following the Settlement, a Joint Stipulation for Dismissal with Prejudice was filed on December 18, 2020 and the Lipsius Lawsuit was dismissed.

On or about November 2, 2018, Louis T.

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Frost, certain current and former members of the Company’s Board of Directors and executive officers (the “Alexander Lawsuit”).

This lawsuit alleges breach of fiduciary duty against the officers and directors named therein, based on the allegations raised by the SEC in the SEC Lawsuit that the Company made misleading statements, and based on a purported failure to maintain proper internal controls.

Alexander seeks to maintain the action on behalf of the Company, that he is a proper and adequate representative of the Company, and also seeks to direct the Company to improve its corporate governance and internal procedures, monetary damages, restitution, an award of reasonable attorneys’ fees, and experts’ fees, and other costs, and such other and further relief as the Court deems just and proper.

Similar to Lipsius, the trial court denied Defendants’ motion to stay this action, pending the resolution of related class action and derivative matters in federal and Delaware state court.

However, the Third District Court of Appeal quashed the trial court’s order denying the stay, finding that the action should be stayed pending resolution of the related actions.

Alexander filed a notice to invoke the discretionary jurisdiction of the Florida Supreme Court to review the Third District Court’s order.

The Florida Supreme Court declined further review of the decision by the Third District Court in February 2020.

This lawsuit alleged breach of fiduciary duty against the officers and directors named therein, based on the allegations raised by the SEC in the SEC Lawsuit that the Company made misleading statements, and based on a purported failure to maintain proper internal controls.

Alexander sought to maintain the action on behalf of the Company, alleged that he was a proper and adequate representative of the Company, and also sought to direct the Company to improve its corporate governance and internal procedures, monetary damages, restitution, an award of reasonable attorneys’ fees, and experts’ fees, and other costs, and such other and further relief as the Court deems just and proper.

Following the Settlement, a Joint Stipulation for Dismissal with Prejudice was filed on December 21, 2020 and the Alexander Lawsuit was dismissed.

On January 28, 2019, Robert Davydov (“Davydov”), a purported stockholder, filed a shareholder derivative complaint in the Circuit Court of the Eleventh Judicial Circuit of Florida serving Miami-Dade County against the Company as a nominal defendant and the certain members of its Board of Directors (the “Davydov Lawsuit”).

The Davydov Lawsuit alleges breach of fiduciary duty based on the allegations raised by the SEC in the SEC Complaint, breach of the duties of care, loyalty and good faith, corporate waste and unjust enrichment.

Davydov seeks to maintain the action on behalf of the Company, alleging that he is a proper and adequate representative of the Company, and also seeks a declaration that the defendants breached their fiduciary duties, an award of monetary damages, restitution, an award of reasonable attorneys’ fees and expert witness fees and other costs, and such other and further equitable relief as the Court deems just and proper.

Defendants have not yet responded to the complaint.

The case is pending before the same judge presiding over the Lipsius and Alexander actions, and will likely be governed by the outcome of the appeal efforts in those actions.

The Davydov Lawsuit alleged breach of fiduciary duty based on the allegations raised by the SEC in the SEC Complaint, breach of the duties of care, loyalty and good faith, corporate waste and unjust enrichment.

Davydov sought to maintain the action on behalf of the Company, alleged that he was a proper and adequate representative of the Company, and also sought a declaration that the defendants breached their fiduciary duties, an award of monetary damages, restitution, an award of reasonable attorneys’ fees and expert witness fees and other costs, and such other and further equitable relief as the Court deems just and proper.

Following the Settlement, a Joint Stipulation for Dismissal with Prejudice was filed on December 15, 2020 and the Davydov Lawsuit was dismissed.

On November 14, 2018, Sammy Lee (“Lee”), a purported stockholder, filed a shareholder derivative complaint in the United States District Court for the Southern District of Florida against the Company as a nominal defendant, Dr.

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Frost, and certain of the Company’s current and former executive officers, and current and former members of its Board of Directors (the “Lee Lawsuit”).

The Lee Lawsuit alleges violations of the federal securities laws based on alleged false and misleading statements of material fact or omissions, breach of fiduciary duty based on the allegations raised by the SEC in the SEC Complaint, and unjust enrichment.

Lee seeks to maintain the action on behalf of the Company, alleging that he is a proper and adequate representative of the Company, and also seeks to direct the Company to improve its corporate governance and internal procedures, monetary damages, restitution, an award of reasonable attorneys’ fees and expert fees and other costs, and such other and further relief as the Court may deem just and proper.

The Lee Lawsuit alleged violations of the federal securities laws based on alleged false and misleading statements of material fact or omissions, breach of fiduciary duty based on the allegations raised by the SEC in the SEC Complaint, and unjust enrichment.

Lee sought to maintain the action on behalf of the Company, alleged that he was a proper and adequate representative of the Company, and sought to direct the Company to improve its corporate governance and internal procedures, monetary damages, restitution, an award of reasonable attorneys’ fees and expert fees and other costs, and such other and further relief as the Court may deem just and proper.

The action was dismissed sua sponte by the Judge for failure to state a claim.

An amended complaint was filed on November 30, 2018.

This matter is currently stayed pending resolution of the Steinberg Lawsuit.

Following the Settlement, a Joint Stipulation for Dismissal with Prejudice was filed and the Lee Lawsuit was dismissed on January 11, 2021.

On December 17, 2018, Thaddeus R.

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Frost, Frost Gamma Investments Trust, and certain of the Company’s current and former executive officers, and current and former members of its Board of Directors (the “Sobieski King Lawsuit”).

The Sobieski King Lawsuit alleges breach of fiduciary duty based on the allegations raised by the SEC in the SEC Complaint, violations of the federal securities laws based on alleged false and misleading statements of material fact or omissions, unjust enrichment, and waste of corporate assets.

The lawsuit seeks to declare that the action is a proper derivative action, a declaration that defendants breached their fiduciary duties, monetary damages, current and former directors to remit all salaries and other compensation received during the period of alleged breach of fiduciary duties, to have the Company improve its corporate governance and internal procedures, an award of pre-judgement and post- judgement interest, reasonable attorneys’ fees, experts’ fees, costs and expenses, and such other and further relief as the Court may deem just and proper.

This matter is currently stayed pending resolution of the Steinberg Lawsuit.

The Sobieski King Lawsuit

alleged breach of fiduciary duty based on the allegations raised by the SEC in the SEC Complaint, violations of the federal securities laws based on alleged false and misleading statements of material fact or omissions, unjust enrichment, and waste of corporate assets.

The lawsuit sought to declare that the action was a proper derivative action, a declaration that defendants breached their fiduciary duties, monetary damages, current and former directors to remit all salaries and other compensation received during the period of alleged breach of fiduciary duties, to have the Company improve its corporate governance and internal procedures, an award of pre-judgement and post- judgement interest, reasonable attorneys’ fees, experts’ fees, costs and expenses, and such other and further relief as the Court may deem just and proper.

Following the Settlement, the Sobieski King Lawsuit was dismissed with prejudice on January 7, 2021.

On December 31, 2018, Connie Wendt (“Wendt”), a purported stockholder, filed a shareholder derivative complaint in the United States District Court for the Southern District of Florida against the Company as a nominal defendant, certain of its current and former executive officers, certain current and former members of its Board of Directors, Frost Gamma Investments Trust, and certain other individuals and an entity named in the SEC Complaint (the “Wendt Lawsuit”).

The Wendt Lawsuit alleges breach of fiduciary duty based on the allegations raised by the SEC in the SEC Complaint, breach of duty of loyalty, breach of fiduciary

duty for insider selling and misappropriation of information, unjust enrichment, and violations of the federal securities laws.

Wendt seeks to maintain the action on behalf of the Company, alleging that she is a proper and adequate representative of the Company, and also seeks a declaration that each of the Company’s named officers and directors breached their fiduciary duties to the Company, monetary damages, disgorgement of alleged profits, an award of costs and disbursements including reasonable attorneys’ fees, accountants’ and experts’ fees and costs and expenses, and such other and further relief as the Court deems just and proper.

This matter is currently stayed pending resolution of the Steinberg Lawsuit.

The Wendt Lawsuit alleged breach of fiduciary duty based on the allegations raised by the SEC in the SEC Complaint, breach of duty of loyalty, breach of fiduciary duty for insider selling and misappropriation of information, unjust enrichment, and violations of the federal securities laws.

Wendt sought to maintain the action on behalf of the Company, alleged that she was a proper and adequate representative of the Company, and sought a declaration that each of the Company’s named officers and directors breached their fiduciary duties to the Company, monetary damages, disgorgement of alleged profits, an award of costs and disbursements including reasonable attorneys’ fees, accountants’ and experts’ fees and costs and expenses, and such other and further relief as the Court deems just and proper.

Following the Settlement, the Wendt Lawsuit was dismissed with prejudice on December 18, 2020.

Between October 2018 and January 2019, five shareholder derivative complaints were filed by purported stockholders in the Delaware Court of Chancery against the Company as a nominal defendant, Dr.

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On February 11, 2019, a Verified Consolidated Derivative Complaint was filed in the Consolidated Delaware Action, and Richard Tunick, Jamie Gewirtz, Emily Gewirtz Stiebel, Esther Susan Lutzker and Ivan Pawlenko were named as Co-Lead Plaintiffs in the filing.

The Consolidated Derivative Complaint alleges breach of fiduciary duty based on the allegations raised by the SEC in the SEC Complaint, and breach of the duty of loyalty.

The lead plaintiffs seek to declare the action a proper derivative action, monetary damages, disgorgement of all remuneration during the relevant time period, to direct the Company to improve its internal controls, equitable and injunctive relief, pre- and post-judgment interest, an award of reasonable attorneys’ fees and expert fees, and such other and further relief as the Court deems just and proper.

On February 12, 2019, the Company and the other defendants named in the Consolidated Derivative Complaint filed a motion to stay proceedings pending resolution of the federal securities class actions;

that motion is fully briefed and remains pending.

The individual defendants also filed motions to dismiss the action;

a briefing schedule on the motions has not yet been issued by the court.

The Company believes the claims set forth in each of the class action complaints and derivative actions are without merit and intends to vigorously defend against them.

The Consolidated Derivative Complaint alleged breach of fiduciary duty based on the allegations raised by the SEC in the SEC Complaint, and breach of the duty of loyalty.

The lead plaintiffs sought to declare the action a proper derivative action, monetary damages, disgorgement of all remuneration during the relevant time period, to direct the Company to improve its internal controls, equitable and injunctive relief, pre- and post-judgment interest, an award of reasonable attorneys’ fees and expert fees, and such other and further relief as the Court deemed just and proper.

The Settlement was approved on November 2, 2020.

On April 8, 2019, MabVax Therapeutics Holdings, Inc.

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On April 5, 2019, former shareholders of Claros Diagnostics, Inc.

filed a complaint in the Chancery Court of Delaware against the Company, alleging among other things, that the Company breached the Agreement and Plan of Merger dated October 13, 2011 by and among OPKO, Claros Merger Subsidiary, LLC and Claros Diagnostics, Inc.

filed a complaint in the Chancery Court of Delaware against the Company, alleging among other things, that the Company breached the Agreement and Plan of Merger dated October 13, 2011 by and among the Company, Claros Merger Subsidiary, LLC and Claros Diagnostics, Inc.

(the “Merger Agreement”):

(i) by failing to make a milestone payment of $2.375 million (payable in OPKO Common Stock) upon obtaining FDA approval of the Claros PSA test;

and (ii) OPKO repudiated its obligations to make additional future milestone payments as required under the Merger Agreement.

OPKO believes the allegations are without merit and plans to vigorously defend against the lawsuit.

BioReference was named as a defendant in at least two class action lawsuits against Retrieval-Masters Creditors Bureau, Inc.

d/b/a American Medical Collection Agency (“AMCA”) and other defendants in connection with a previously disclosed data security incident involving AMCA (the “AMCA Incident”) where an unauthorized user had access to AMCA’s system which may have included patient name, date of birth, address, phone, date of service, provider, as well as other information.

BioReference notified its affected patients and provided notice to the Office for Civil Rights (“OCR”) of the Department of Health and Human Services of the AMCA Incident.

We believe the action is without merit as it relates to claims against BioReference.

On or about September 16, 2018, Dalia Avraham filed an Application for Approval of a Class Action in the Tel Aviv Israel District Court against the Company and Dr.

This application was filed by a purported stockholder, both individually and on behalf of a putative class of the Company’s stockholders (the “Avraham Claim”).

The Avraham Claim seeks to declare the action to be a class action and an estimated NIS 20 million in damages.

We believe that this action is without merit and the Company intends to vigorously defend itself.

and (ii) by repudiating its obligations to make additional future milestone payments as required under the Merger Agreement.

In January 2021, the Company and the shareholder representative entered into a settlement agreement providing, among other things, that it pay the shareholders $1.1875 million, which amount is equal to half the initial milestone payable under the Merger Agreement.

A Stipulation of Dismissal With Prejudice has been filed with the Court.

On or about February 3, 2021 BioReference received correspondence from the US Department of Labor (“US DOL”) stating that it would be conducting a Wage and Hour investigation for the Genpath division for the span of 2019 and 2020 and was seeking records related to same including gross sales, employee roster information, comprehensive payroll and time-log records, and 1099 forms and contract records for independent contractors and subcontractors.

On February 15, 2021, BioReference received a Subpoena from the NJ Department of Labor (“NJ DOL”) seeking similar information for the time time period as the US DOL inquiry for BioReference, as well as information related to unemployment and disability taxes,

workmen’s compensation, and records related to earned sick leave, and financial information.

It is uncertain at this time whether the two matters are interrelated and the Company can express no opinion as to the likelihood of an unfavorable outcome or range of potential loss regarding this matter.

BioReference is currently gathering the requested information.

MINE SAFETY DISCLOSURES.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 3. Legal Proceedings