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Note 10 - Commitments and Contingencies
3 Months Ended
Mar. 31, 2014
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Disclosure [Text Block]

10. Commitments and Contingencies


Our business results in medical malpractice lawsuits. We are insured through our captive insurance company to provide coverage for current claims brought against us. We use the captive insurance company for both primary insurance and excess liability coverage. A number of claims are now pending with our captive insurance company.


Our loss reserves are based on our historical claim experience, comparable industry experience and recent trends that would impact the ultimate settlement of claims. However, due to the uncertainties inherent in the determination of these liabilities, the ultimate settlement of claims incurred through March 31, 2014 could differ from the amounts recorded. At March 31, 2014 and December 31, 2013, we maintained insurance reserves of $6.4 million and $6.6 million, respectively, of which $838,000 and $867,000 have been classified as current within the caption “Accrued liabilities and other” in the Condensed Consolidated Balance Sheets. Although our insurance reserve reflects our best estimate of the amount of probable loss, we believe the range of loss that is reasonably possible to have been incurred to be approximately $4.7 million to $13.0 million at March 31, 2014. We record any adjustment to these estimates in the period determined.


We have entered into certain media purchase commitments which require us to spend an aggregate of $1.1 million over the next two years.


Six putative class action lawsuits (four in the Hamilton County (Ohio) Court of Common Pleas and two in the Chancery Court of Delaware) challenging the proposed merger with PhotoMedex have been filed on behalf of all LCA-Vision Inc. stockholders against our directors, our chief executive officer, our company and PhotoMedex. The lawsuits allege that our directors breached their fiduciary duties to our stockholders by engaging in a flawed process for selling LCA-Vision Inc., by agreeing to sell LCA-Vision Inc. for inadequate consideration and permitting the merger agreement to contain improper deal protection terms, and that management’s proxy statement soliciting votes in favor of the merger misstated or omitted material information. In addition, the lawsuits allege that the corporate defendants aided and abetted these breaches of fiduciary duty. The lawsuits sought, among other things, an injunction barring the stockholder vote scheduled for May 7, 2014 and the consummation of the merger and attorneys’ fees. The lawsuits were later consolidated into two actions, one in Ohio and one in Delaware.


On April 29, 2014, counsel for the plaintiffs in the Ohio case agreed to withdraw their motion for a preliminary injunction against the stockholder vote and, together with counsel in the Delaware case, agreed not to seek to enjoin the stockholder vote or the consummation of the merger, in return for our agreement to make certain supplemental disclosures related to the merger. The agreement will not affect the amount of merger consideration that LCA stockholders will be entitled to receive in the merger or any other terms of the merger agreement.


The additional disclosures are contained in a Current Report on Form 8-K that we filed with the SEC on April 30, 2014.


The defendants in the litigation deny all fault or liability and specifically deny that they have committed any of the unlawful or wrongful acts alleged in the litigations, and specifically deny that the additional disclosure was required to supplement the proxy statement. The defendants agreed to provide the supplemental disclosures solely to minimize the cost of defending the litigation and to permit the special meeting of stockholders and the stockholder vote to proceed without delay.


There can be no assurance that the parties to the litigation will enter into a stipulation of settlement that the court will approve, or as to the outcome of the litigation if the court does not approve a settlement.


In addition to the above, we are periodically subject to various other claims and lawsuits. We believe that none of these other claims or lawsuits to which we are currently subject, individually or in the aggregate, will have a material adverse affect on our business, financial condition, results of operations or cash flows.