Item 1. Legal Proceedings
ITEM 1.
LEGAL PROCEEDINGS.
We are a party to various legal actions, proceedings, and claims (some of which are not insured), and regulatory and other governmental audits and investigations in the ordinary course of our
business. We cannot predict the ultimate outcome of pending litigation, proceedings, and regulatory and other governmental audits and investigations. These matters could potentially subject us to sanctions, damages, recoupments, fines, and other
penalties. The Department of Justice, CMS, or other federal and state enforcement and regulatory agencies may conduct additional investigations related to our businesses in the future that may, either individually or in the aggregate, have a
material adverse effect on our business, financial position, results of operations, and liquidity.
ITEM 1A.
RISK FACTORS.
The Company added the following risk factor in addition to our previously disclosed risk factors in Item 1A contained in Part I of our Annual Report on Form 10-K for the year ended December 31,
2023, and filed with the SEC on February 29, 2024.
If our noncompetition covenants with employed therapists are nullified, we may lose staff to competitors.
Many of our employed therapists have contractual non-competition agreements and covenants with the Company which, under certain circumstances, limit the employee’s ability to terminate their
employment with the Company to perform similar services for competing organizations within a defined geography for a specified period time after such termination. The Federal Trade Commission recently passed a Rule which purports to prohibit many
forms of non-competition agreements with employees and, if the Rule becomes effective in its current form, also would require the Company, subject to certain exceptions, to nullify certain existing noncompetition agreements with employees. While
the Rule is being challenged in federal court and is not currently effective, if the Rule in its current form or in a substantially similar form becomes effective, the Company could suffer a loss of staff which could have a material adverse effect
on operations.
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