COVID-19 Class Action Says Test Wasn’t ‘100% Accurate’

A COVID-19 test class action lawsuit has been filed against a manufacturer and its operators claiming they made fraudulent statements, driving up stock prices, only to dump their stock as the fraud was realized.

Lead plaintiff, Gelt Trading, says that in the wake of the coronavirus pandemic, when the need for rapid, inexpensive, and accurate testing became apparent, the officers and directors of Co-Diagnostics made false statements about their COVID-19 test.

Gelt claims they did so to boost the price of the company’s stock, conveniently selling off before authorities discovered that the product did not match advertising claims.

“Fast, accurate, and readily accessible testing for Covid-19 provides government officials with crucial health information and data needed to combat the pandemic,” explains the COVID-19 test class action lawsuit, noting that accurate tests allow policy makers to implement effective social distancing and other measures to help stop the spread of the disease.

According to the complaint, the officers and directors touted Co-Diagnostics as “100% accurate,” leading to contracts with various governments both in the U.S. and around the world.

“Early in the Covid-19 pandemic, drug companies were racing to create an accurate diagnostic test for the virus that had quick response times,” point out the plaintiffs.

“Co-Diagnostics seemingly won that race. Co-Diagnostics announced that it had received regulatory clearance to sell its tests in the European Community on February 24, 2020—the first company in the world to receive this clearance.”

The complaint notes that the company received emergency use clearance from the FDA in April.

While Co-Diagnostics seemingly got the jump on competitors when it came to COVID-19 tests, its officers and directors, who are also named as defendants in the class action lawsuit, were able to drive up the company’s stock that they had purchased at “basement” prices, alleges the plaintiff.

However, the performance of Co-Diagnostics’ COVID-19 tests did not live up to expectations, contends the complaint.

“Co-Diagnostics’ Covid-19 tests are materially less than 100% accurate – a discrepancy that can have momentous adverse consequences if Co-Diagnostics’ tests are used on a widespread basis, as intended,” states the coronavirus class action lawsuit.

Co-Diagnostics allegedly enjoyed an influx of taxpayer money based on its accuracy claims initially, enticing investors to continue to fund the company. However, that influx ended when regulatory authorities allegedly “contradicted” the company’s advertising claims and those representing the company “began acting evasively,” according to the COVID-19 test class action lawsuit.

The lawsuit states that Co-Diagnostics used small sample sizes to support its claims that its COIVD-19 test was 100% accurate. In reality, alleges the plaintiff, Co-Diagnostics’ test only accurately reported about half of COVID-19 infections.

As the extent of the false statements about Co-Diagnostics’ COVID-19 tests was reportedly revealed, the stock price of the company went from $29.72 per share to a low of $15.80 per share.

According to the complaint, Co-Diagnostics had been facing delisting from the stock exchange because its shares were valued at less than $1.

As the stock price fell, the FDA announced that no COVID-19 test can be completely accurate, points out the plaintiff, contradicting Co-Diagnostics’ own claims of accuracy.

Further, the company’s officers allegedly refused to address growing concerns about their COVID-19 test, instead touting the millions of tests sold during an earnings call.

“The stock never rebounded, and today trades at severely reduced volume for between $15 and $16 per share,” states the complaint, also alleging that it is unlikely the stock will ever rebound.

The plaintiff claims that the directors and officers of the company used this situation to reap ill-gotten gains and deceived outside investors by “rapidly exercising stock options for pennies per share and immediately selling their shares” from the “fraud-inflated price of the stock.”

“Investors who believed Co-Diagnostics claims of 100% accuracy have lost hundreds of millions of dollars as a result of Co-Diagnostics’ blatantly fraudulent statements to the investing public.”

The proposed Class Members in the COVID-19 testing class action lawsuit are those who purchased securities in Co-Diagnostics between Feb. 25, 2020 and May 15, 2020.

The complaint contends that proposed Class Members face huge losses due to Co-Diagnostic’s fraudulent claims about its COVID-19 tests as the stock price continues to trend downward with the plaintiff foreseeing the “inevitability” of shares in the company becoming, once again, a penny stock.

The plaintiff is seeking compensatory damages along with attorneys’ fees and costs.

Have you had a COVID-19 test? Are you concerned about accuracy claims? Tell us what happened in the comment section below!

The lead plaintiff and proposed Class Members are represented by D. Loren Washburn of Smith Washburn LLP, Michael A. Pineiro of Marcus Neiman Rashbaum & Pineiro LLP, and Michael C. Fasano of Fasano Law Firm PLLC.

The COVID-19 Test Class Action Lawsuit is Gelt Trading LTD v. Co-Diagnostics Inc., et al., Case No. 2:20-cv-00368-CMR, in the U.S. District Court for the District of Utah.

Join a Free Coronavirus Class Action Lawsuit Investigation

If you believe your rights were violated in a way that is directly related to the coronavirus pandemic, you may qualify to join this coronavirus class action lawsuit investigation. 

Join Here

Read More Lawsuit & Settlement News:

Google Class Action Says ‘Loot Boxes’ Are Misleading

Ethicon Surgical Staplers Recalled by Manufacturer

InterContinental Hotel Data Breach Class Action Settlement

A Guide to the Negative Impacts of OxyCide Cleaner