Saturday, September 23, 2023

Insurtech firm Clover Health is settling the remaining lawsuits -Dlight News

based in Tennessee Clover Health announced that it has reached an agreement to resolve seven lawsuits in Delaware, New York and Tennessee relating to allegations that the company failed to disclose when it went public in 2021 that the company was under an active investigation the Justice Department is running.

Clover Health offers Medicare Advantage insurance plans and provider tools like the Clover Assistant, which combines health data with machine learning to provide physicians with patient insights at the point-of-care. It suggests medications, dosages, tests, referrals, and others to help physicians improve their health outcomes.

according to a press releaseDefendants in the lawsuits will receive “customary indemnifications” and Clover Health will implement “a number of corporate governance improvements.” Clover admitted no wrongdoing.

Other than payment of fees and expenses to plaintiff’s counsel, no monetary payments are included in the latest settlement and the final settlement is subject to court approval.

“The Board and the Company are pleased that this settlement has been reached in the outstanding derivatives lawsuits. This resolution, along with the previously announced settlement in the securities class action lawsuit, allows the Clover team to remain mission-focused and task-focused.” to improve the lives of our members and to build and sustain our strong business,” Clover Health CEO Andrew Toy said in a statement.


in 2020, Clover announced plans to merge with special purpose vehicle (SPAC) Social Capital Hedosophia Holdings Corp. III to go public. The deal was completed in January 2021.

Clover and Social Capital Hedposophia were brought together through a mix of cash financing and stock, taking Clover’s value to approximately $3.7 billion. The insurtech company would receive up to $728 million of the transaction proceeds, and up to $500 million of the cash proceeds would go to existing Clover shareholders.

The transaction also included a private investment of $400 million in public capital at $10 per share, including $100 million from Chamath Palihapitiya, Founder and CEO of Social Capital Hedosophia, $50 million from Hedosophia and the rest from other investors. Palihapitiya was expected to act as senior advisor on closing of the transaction in Q1 2021.

months laterHindenburg Research, a short seller who describes himself as a specialist in forensic financial research, published a report Criticism of Clover Health’s business and Palihapitiya’s behavior in the run-up to his SPAC.

Hindenburg claimed the company failed to disclose active investigations by the Justice Department, arguing that many of the company’s claims were misleading or outright false.

According to the report, Clover was actively being investigated for “at least 12 incidents ranging from kickbacks to marketing practices to undisclosed third-party dealings” that were not made public. It also cited several former employees who claimed that about two-thirds of the company’s revenue “is fueled by an important undisclosed relationship between Clover and an outside brokerage firm controlled by Clover’s head of sales.”

In April, the company announced that it had settled a securities class-action lawsuit in which the class-action lawsuit would receive $22 million, with $19.5 million of which the company’s insurance would pay and the remaining $2.5 million – Dollars out of pocket.

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