Business

Health Net causes Centene fresh legal trouble

Health Net, an American health care insurance provider that Centene Corporation acquired in 2016 for $6.8 billion has brought legal trouble to its parent company yet once again. A fresh lawsuit (https://bit.ly/3bgs8Yw) has been filed in the US District Courts against Health Net, Centene and its CEO Michael Neidorff, and several others alleging racketeering and a conspiracy that drove a whistleblower, Sovereign Health Group, out of business in 2018 just to keep the irregularities in Centene’s Health Net acquisition away from scrutiny.

Health Net, which provides health benefits to approximately 5.9 million individuals in all 50 states and the District of Columbia through group, individual, Medicare, Medicaid, Tricare, and Veterans Affairs programs, was acquired by Centene in 2016 despite criticism by many of its investors. There have been allegations and lawsuits in the past as well that hinted upon wrongdoings in the deal, which were settled by Centene out of court.

The new lawsuit brings the irregularities in the acquisition to the limelight yet once again. This development does call for a deeper scrutiny of the lies that were sold to the investors and shareholders by Centene’s CEO to get necessary approvals for the acquisition from its Board.

The new lawsuit gives rise to speculation that there was definitely something very fishy that happened in the Health Net’s acquisition by Centene Corporation and those involved went to great lengths to keep things under wraps.

It is pertinent to remind here that Michael Neidorff made a windfall and earned a huge amount in cash and stocks as his performance bonus after Centene’s acquisition of HealthNet. Michael Neidorff is said to have sold $20 million worth of his stock soon after and he was the one person who had all information about the deal including everything shady that’s been alleged time and again and which Centene has tried to settle out of court each of the time.

If at all the allegations in the new lawsuit by Sovereign are true, they add a new dimension to the Health Net acquisition story and bring to light the web of lies that was spun by Michael Neidorff and his team to get the deal approved by Centene’s Board of Directors.

Even the Board of Directors will have to answer a lot of questions if the allegations in the new lawsuit are found to be true as the members of the board must have benefited from the deal as well while they all looked away from all that was wrong with the deal and not calling for a greater scrutiny of the same.

However, if the allegations made in the new lawsuit do stick, the worst hit will be the shareholders of Centene Corporation and those who have bought health insurance from Health Net or any other subsidiary of the company. The innocent shareholders stand to lose their investments and Centene’s customers stand to lose their health cover if the company were to go under.

Unless, of course, another out of court settlement is made by Centene. But even then, it will be a case of “not right now,” and the question of “how long before it does happen” that will keep lingering on. It seems like white collar crime and corruption are eating into the soul of American markets and the small investors are being taken for a huge ride once again!