A class action suit has been filed against Teladoc Health stemming from allegations of inappropriate sexual and financial misconduct revealed in a report from the Southern Investigative Research Foundation (SIRF).
The legal complaint from shareholder Jon Reiner alleges that the company made false statements and failed to disclose that Teladoc Chief Operating Officer and Chief Financial Officer Mark Hirschhorn had an inappropriate sexual relationship with a subordinate, and engaged with the employee in insider trading prohibited by the company’s internal policies.
Hirschhorn and Teladoc CEO Jason Gorevic are named along with the company as defendants in the lawsuit. Hirschhorn started at Teladoc in 2012 as the company’s chief financial officer and added chief operating officer to his title in 2016.
Purchase, New York-based Teladoc was founded in 2002 and provides telemedicine services to health plans, health systems and other healthcare customers. The company earned more than $233 million in revenue in 2017 and acquired Advance Medical earlier this year for $352 million in a bid to expand operations globally.
The SIRF article reported that Hirschhorn engaged in an affair with a low level Teladoc employee named Charece Griffin who received undue promotions due to the relationship. The piece also alleges that the two traded the company’s stock based on Hirschhorn’s financial advice.
After being made aware of the insider trading, the article goes onto claim that Griffin’s boss reported the details of the affair to the company’s legal and HR departments. This led to an internal investigation that substantiated the allegations, but resulted in few penalties to Hirschhorn, according to the SIRF story.
The release of the SIRF article triggered a 6.7 percent drop in the value of the Teladoc stock, which the lawsuit characterizes as “significant losses and damages” for shareholders. The legal complaint alleges that the public financial disclosures made by Teladoc contained “false and misleading statements.”
Teladoc has responded to the SIRF report with a statement saying the article “contains several factual inaccuracies.”
“When we were made aware of the allegations against Mark Hirschhorn in 2016, we engaged an outside law firm to investigate the claims. That investigation found violations solely of our workplace relationship policy, and our board of directors took swift and appropriate disciplinary action to address the violations. This matter was handled in a prompt, thorough and fair manner,” the statement reads.
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