CorVel Shares Plunged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of medical cost containment and managed care services provider CorVel (NAS: CRVL) tanked by as much as 12% earlier in the trading day after Copperfield Research issued a report questioning the company's ethical and legal practices.

So what: Copperfield, which admittedly has a short position in CorVel, likened the potential accusations of wrongdoing at CorVel to the investigations currently under way at Community Health Systems (NYS: CYH) . Copperfield notes that CorVel has purportedly been operating as a silent preferred provider prganization, which has allowed it to regularly undercut payments to health-care providers.

Now what: Here we go with another case of questionable ethics, potentially on both sides of the coin. It's always hard to believe a research firm like Copperfield, which has a vested interest in the outcome of this story and is unwilling to accuse CorVel of any wrongdoing -- it's only willing to insinuate it. On the other hand, this also puts a dark cloud over CorVel's business practices until the company refutes these allegations. I personally feel the stock is worth avoiding altogether, but it may be worth keeping a close eye on.

Craving more input? Start by adding CorVel to your free and personalized watchlist so you can keep up on the latest news with the company.

At the time thisarticle was published Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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