TACOMA, Wash. (Legal Newsline) - A class action lawsuit has been brought against a workplace safety company alleging it understated Workers' Compensation reserves by at least $80 million.
The lawsuit was filed in U.S. District Court for the Western District of Washington on behalf of anyone that purchased stock in Barrett Business Services between Feb. 12, 2013, and Oct. 28.
The complaint states the business allegedly knowingly filed false information with the Securities and Exchange Commission during that time period.
A report published by Copperfield Research on Sept. 16 revealed that Barrett's Workers' Compensation reserves “have systemically been under reserved” causing overstatements in earnings, the complaint said.
Barrett said on Oct. 28 it had begun new standards for reserving Workers' Compensation claims in 2013, the complaint said.
The new standards caused a “disruption in the incurred and paid trends in the claims data during 2014, making it difficult for the company’s actuary to provide management with the best estimate of probable liability,” the complaint says.
As a result, the company announced it was increasing the reserve by an additional $80 million, a 65 percent increase. The lawsuit claims the announcement proved the company's prior statements about its procedures in estimating Workers' Compensation were false.
Stock for the company fell by 59 percent on Oct. 29 to $18.28 per share after the company made the announcement.
The plaintiffs are represented by Dan Drachler of Zwerling, Schachter & Zwerling in Seattle and Robert Finkel and Fei-Lu Qian of Wolf Popper in New York.
U.S. District Court for the Western District of Washington case number 3:14-cv-05903.