Clover Health has settled seven lawsuits alleging the Medicare Advantage insurer defrauded shareholders by concealing it was the subject of a federal fraud investigation prior to its initial public offering.
The startup did not disclose what it has agreed to pay plaintiffs in civil lawsuits filed in federal courts in Delaware and Tennessee and state courts in Delaware and New York. The proposed settlements require Clover Health to strengthen its corporate governance oversight, the company announced in a news release Thursday. According to the company, the agreements do not represent an admission of guilt and do not include payments on the plaintiff’s attorney fees and expenses.
Clover Health did not immediately respond to a request for an interview.
Clover Health enters the mass market in 2021 through a special purpose acquisition company merger with Social Capital Hedoophia Holdings Corp. III, which values the insurer at $3.7 billion.
A month after the IPO, activist investment group Hidenburg Research reported that the Justice Department was investigating whether Clover Health wrongly billed Medicare Advantage. The disclosure sparked a wave of lawsuits from shareholders accusing the company of covering up a federal investigation and other information about its operations before going public.
In April, Clover Health agreed to pay $22 million to settle a securities fraud lawsuit. The same month, the company announced plans to restructure and lay off employees.
The insurer, which recently changed its name to a physician-assistant company, was the second-lowest profitable health insurer behind Bright Health Group in the first quarter, when it posted a net loss of 72.6 million dollars. Like Bright Health, Clover Health is considering a reverse stock split to boost its share price by $1 to continue its listing on the Nasdaq Stock Exchange. Clover Health opens at 88 cents on Friday.
