A class action lawsuit was filed against Semler Scientific (SMLR) on August 29, 2025. The plaintiffs (shareholders) alleged that they bought SMLR stock at artificially inflated prices between March 10, 2021, and April 15, 2025 (Class Period) and are now seeking compensation for their financial losses. Investors who bought SMLR stock during that period can click here to learn about joining the lawsuit.
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Semler Scientific is a MedTech company focused on developing novel solutions to give providers and their patients the opportunity to detect early signs of chronic diseases. Its flagship product, QuantaFlo, is approved by the U.S. FDA for the measurement of arterial blood flow in the extremities.
The company’s failure to disclose a material investigation by the U.S. Department of Justice (DOJ) into violations of the False Claims Act is at the heart of the current complaint. The False Claims Act protects federal programs, such as Medicare and defense contracts, from fraud and misuse, while encouraging whistleblowers to report fraud through financial rewards and legal protections.
Semler Scientific’s Misleading Claims
According to the lawsuit, SMLR and three of its current and/or former senior officers (the Defendants) repeatedly made false and misleading public statements throughout the Class Period. In particular, they are accused of omitting truthful information about a material investigation by the U.S. DOJ into violations of the False Claims Act, and ancillary matters, from SEC filings and related material.
At the beginning of the Class Period, the company stated that the federal government was using the civil False Claims Act to investigate healthcare providers and suppliers for improper Medicare billing. These investigations had led to large financial settlements including millions and billions of dollars, and some criminal convictions.
In the same annual report, Semler Scientific stated that the DOJ is closely monitoring how healthcare companies interact with providers to ensure compliance with federal laws, resulting in more investigations, prosecutions, convictions, and settlements than ever before.
Finally, the company stated that if the government decides Semler Scientific violated fraud or abuse laws, the company and its employees could face serious penalties.
However, subsequent events (detailed below) revealed that the defendants had failed to inform investors that a DOJ investigation was already underway and that initial settlement discussions with the DOJ had begun.
Plaintiffs’ Arguments
The plaintiffs maintain that the defendants deceived investors by lying and withholding critical information about the company’s business during the Class Period. Importantly, the defendants failed to inform investors that Semler Scientific had reached a settlement with the DOJ regarding violations of the False Claims Act.
The information became clear after the markets closed on February 28, 2025, when Semler Scientific first publicly acknowledged the investigation. SMLR stock fell 9.4% on the news. However, the final blow came after the market closed on April 15, 2025, when the company filed a current report with the SEC, detailing the issue.
On February 11, 2025, Semler Scientific began initial settlement talks with the DOJ but quickly paused them, over a civil investigative demand (CID). The company later resumed discussions and had finally agreed in principle to pay $29.75 million to settle all claims, not including possible legal fees for the whistleblower’s lawyers. Following the news, SMLR stock plunged nearly 10% the next day.
To conclude, the defendants failed to inform investors about the ongoing DOJ investigation into violations of the False Claims Act and the potential settlement. Due to these issues, SMLR stock has lost more than 57% year-to-date.
