Shareholder sues Centene for perception on management’s position in alleged Medicaid fraud

A Centene investor is taking the nation’s largest Medicaid managed care insurer to courtroom, searching for entry to firm information to find out how a lot its leaders are guilty for the $1.25 billion the corporate expects to pay out in drug fraud settlements.

Shareholder Robert Garfield filed the lawsuit in Delaware Chancery Courtroom Tuesday. Beneath state legislation, inventory homeowners have the appropriate to examine companies’ inside books and information. The plaintiff goals to determine whether or not firm leaders breached their fiduciary duties and engaged in wrongdoing, in keeping with the grievance.

Based mostly on firm experiences, speeches and choices which can be publicly out there, Garfield argues that “the board and administration both knew or ought to have recognized that their haphazard method to compliance facilitated and permitted widespread fraud,” the lawsuit says.

Centene didn’t reply to an interview request.

The for-profit insurer has reserved $1.25 billion to settle allegations it is now defunct pharmacy profit supervisor, Envolve, defrauded state Medicaid packages. The setaside for these instances is equal to extra than half the firm’s 2020 income, the lawsuit says.
Centene paid out a mixed $214 million to Arkansas, Illinois, Mississippi and Ohio in Medicaid settlements up to now this yr.

The identical day Garfield filed his grievance, Kansas prosecutors introduced Centene would pay one other $32.4 million over its PBM operations. Greater than a dozen different states have employed the legislation agency Liston & Deas to research Centene and different PBMs’ Medicaid billing and clawback practices, which the states say sidestep bans on unfold pricing.

The settlements will minimize into Centene’s backside line and threaten its potential to safe new Medicaid contracts, Garfield alleges. Fraud accusations additionally tarnish the corporate’s status amongst policymakers, taxpayers and traders, the grievance says.

In August, Garfield requested information associated to Centene’s compliance procedures. Centene denied him, in keeping with the lawsuit.

In October, Garfield tried once more, demanding to examine minutes from previous board conferences, firm compliance insurance policies, Medicaid billing receipts and extra. The 2 events talked later that month about Centene’s want for Garfield to signal a confidentiality settlement earlier than handing over lots of of paperwork associated to its PBM operations, he alleges.

The next month, Centene offered Garfield with a proposed confidentiality settlement. Garfield returned the contract along with his edits, which included eradicating a provision that will forestall him from searching for extra authorized motion after viewing the information. Centene responded by restoring that language in one other model of the settlement, the grievance says.

So far, the 2 haven’t agreed on the language of the confidentiality settlement and Centene has not produced any of the supplies associated to its Medicaid drug pricing, in keeping with the lawsuit.

“The corporate’s prolonged delays in negotiating its desired confidentiality settlement are

indicative of its obstructionist method,” the grievance says.

Garfield seeks entry to these information, reimbursement for courtroom charges and another reduction the courtroom deems equitable and simply.

Centene has Medicaid contracts in 30 states and covers 14 million enrollees. The corporate restructured its PBM in 2019 to serve solely as a third-party administrator and is now on the hunt for an outdoor operator handle its $300 billion in annual drug spending.

Final month, the hedge fund Politan Capital Administration acquired a $900 million stake in Centene as a part of its bid to shake up the corporate’s management and operations.

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