The legal action, initiated in November 2024, alleges that PACS Group systematically submitted false Medicare claims for unnecessary respiratory and sensory integration therapies. According to the complaint, these practices accounted for more than 100% of the company's operating and net income during the three-year period. Furthermore, the suit contends that the firm falsified documentation regarding its staffing levels and licensure, rendering its previous public statements about business health and financial prospects materially misleading.

A consolidated amended complaint was filed on December 19, 2025, following the initial filing. The defendants responded on February 17, 2026, by filing a motion to dismiss the case. The Shareholders Foundation, a service that monitors portfolio legal issues, is currently coordinating with investors who purchased shares before April 2024 to discuss potential options regarding the pending litigation.