Skip to main content

Analysis

Centene, Health Net, Lawyers Slapped with $1.1B RICO Suit

By John Commins  
   May 12, 2020

Now-defunct Sovereign Health says the defendants schemed to deny payments so they could recoup $390 million Centene lost when it purchased Health Net.

Sovereign Health has filed a $1.125 billion RICO lawsuit against Centene Corp., Health Net, and their attorneys, alleging that the defendants schemed to deny payments owed to the now-defunct San Clemente, CA-based mental health and addiction services provider.

In documents filed in a U.S. District Court in Los Angeles, Sovereign alleges that the defendants, including Centene CEO Michael Neidorff, and their attorneys at Manatt, Phelps & Phillips colluded to reneg on claims as part of a strategy to recoup $390 million in liabilities that were not properly disclosed when Centene acquired Health Net for $6.3 billion in March 2016.

Related: Centene Reports Solid Q1, Prepares for 'Choppy' Economic Recovery From COVID-19

The 30-page suit alleges that the defendants "engaged in practices that are in violation of the Racketeer Influenced and Corrupt Organizations Act (RICO); Conspiracy to Violate RICO; Intentional Interference with Prospective Economic Advantage, Violation of Unfair Competition Law; and Slander."

Sovereign, which operated nine mental health and substance abuse treatment centers in California and four other states before shuttering in July 2018, is seeking $625 million in damages, plus interest accrued, and $500 million in punitive damages.

St. Louis-based Centene and Woodland Hills, CA-based Health Net did not respond to requests for comment. HealthLeaders' was unable to locate a spokesperson for Manatt, Phelps & Phillips.    

Related: Centene, Cigna, and Fresenius Among 2019 Winners and Losers

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

Photo credit: KIEV, UKRAINE - Dec 11, 2018: Centene Corporation Insurance company logo seen displayed on smart phone. - Image / Editorial credit: IgorGolovniov / Shutterstock.com


KEY TAKEAWAYS

Sovereign, which operated nine mental health and substance abuse treatment centers in California and four other states before shuttering in July 2018, is seeking $625 million in damages, plus interest accrued, and $500 million in punitive damages.

The 30-page suit alleges that the defendants "engaged in practices that are in violation of the Racketeer Influenced and Corrupt Organizations Act (RICO); Conspiracy to Violate RICO; Intentional Interference with Prospective Economic Advantage, Violation of Unfair Competition Law; and Slander."


Get the latest on healthcare leadership in your inbox.