LITIGATION

12 Months Ended

Dec. 31, 2014

Litigation

LITIGATION

Note 9. LITIGATION

In the ordinary conduct of the Company business, they are subject to periodic lawsuits and claims. Although management cannot predict with certainty the ultimate resolution of lawsuits and claims asserted against the Company, management does not believe that any currently pending legal proceedings to which the Company is a party could have a material adverse effect on the Company, or the Company’s future results of operations, cash flows or financial condition except as described below:

The Company initiated an action against Jerry Katzman, a former director, in July 2009 alleging that Mr. Katzman fraudulently induced us to enter into an employment agreement and, alternatively, that Mr. Katzman breached that alleged employment agreement and was rightfully terminated. In September 2010, the matter proceeded to a trial by jury. The jury found that Mr. Katzman did not fraudulently induce Advanzeon to enter into the contract but also found that Mr. Katzman was not entitled to damages. On defendant’s motion to amend the verdict due to inconsistency, the trial court set aside the jury verdict and awarded Mr. Katzman damages of approximately $1.3 million. The Company appealed the lower court’s decision and posted a collateralized appeal bond for approximately $1.3 million. On February 14, 2013, the 11^th Circuit Court of Appeals of the State of Florida reversed the lower court’s judgment in favor of Katzman and remanded the case for a new trial on both liability and damages. The appellate court also taxed appellate costs in favor of Advanzeon against Katzman. The decision of the appellate court also reverses the lower court’s award of attorney’s fees previously awarded to Katzman against Advanzeon. To avoid litigating the case a second time, we began making payments in accordance with a Term Sheet. Katzman objected to the amounts we were paying monthly and filed suit in the Circuit Court of the Thirteenth Judicial Circuit in and for Hillsborough County Florida, Case No. 12-CA-2570, to find us in breach of the Term Sheet. On March 8, 2017 the Court determined that we had breached the Term Sheet and entered a Final Judgment in the amount of $866,052 bearing interest at the statutory rate. Management is in the process of securing a bond against the judgment. The case is currently on appeal in the Second District Court of Appeal, Florida, Case No. 2D17-1433. However, the case remains active for execution (collection) on the judgment. Since filing the appeal the execution portion of the proceedings has been removed from the Circuit Court of the Thirteenth Judicial Circuit in and for Hillsborough County Florida and is now before the United States District Court, Middle District, Tampa Division, Case. No. 8:17-CV-2107-T-23AEP.

In a related matter to the Katzman litigation, on January 10, 2017, the Company brought an action against Melanie Damian et al. Case number 17-CA-00252, Thirteenth Judicial Circuit Court, Hillsborough County, FL. The Company alleges wrongful collection practices including wrongful garnishment of bank accounts.

The Company has filed a claim for money it maintains is owed by Universal Health Care Insurance Company. In re: The Receivership of Universal Health Care Insurance Company. Case number 2013-CA-00358 and Case number 2013-CA-00375 in the Second Judicial Circuit Court, Leon County, FL. The objection to the claim by the receivership was heard April 4, 2018.

In Michael Ross et.al v. Advanzeon Solutions, Inc., Plaintiff is suing the Company for money it claims is owed pursuant to a promissory note. The Company is filing a motion for summary judgment. Case Number 16-CA-005737, Thirteenth Judicial Circuit Court Hillsborough County, FL. Filed April 7, 2015.

In Advanzeon Solutions, Inc. v. Mayer Hoffman et. al.., Case Number 16-CA-005737 Thirteenth Judicial Circuit Court Hillsborough County, FL., the Company has sued Defendants for damages for breach of audit services contract. The Judge ruled in favor of Defendants motion for summary judgment, but no judgment has been entered. The Company will file for a rehearing of the summary judgment and or an appeal. Filed June 17, 2016.

In a matter entitled Pharmacy Value Management Solutions, Inc. vs Young & Son Tax and Accounting, LLC, Charles Young Sr., Charles Young Jr. and Jay Jacques, the Company brought this action for damages for among other things breach of accounting service contract, mandatory injunction, return of documents and conversion of accounting funds held in the accountants’ trust account. The case is in the initial stage. Case Number 18-CA-000960 Thirteenth Judicial Circuit, Hillsborough County, FL. Filed March 31, 2018.