Centene Corp. and Kentucky are ending their long-standing legal spat over the insurer's early termination of its Medicaid managed-care contract.
In 2013, the insurer pulled out of the multiyear deal to manage care, alleging the state didn't give the company necessary information about the deal. The move led to dueling lawsuits between the state and Centene subsidiary Kentucky Spirit Health Plan. Centene maintained the contract terms allowed it to bow out of the agreement early, but Kentucky alleged the move cost it $28 million to $40 million and sued for breach of contract. State trial and appeals courts sided with Kentucky in the dispute.
Centene said it will receive “an immaterial cash payment” under the terms of the settlement from PricewaterhouseCoopers, the state's actuarial firm in 2011 that created a databook used by managed-care organizations to bid on the underlying contract. Doug Hogan, a spokesman for Kentucky's Cabinet of Health and Family Services said the state will receive $7.5 million from PWC as well, in return for dismissing its claims against the firm. Kentucky will not make any payments as part of the settlement, he said.
“Based on the potential liability in this case and potential burden to tax payers, and the significant litigation expenses associated with this case, this is an excellent outcome for the Commonwealth of Kentucky,” Hogan said.
“The parties agree that neither party acted in bad faith, that they took reasonable positions in light of the applicable contractual language and that parties acted in good faith in attempting to address a difficult situation.”
In 2015, the secretary for Kentucky's Cabinet for Health and Family Services ruled that the insurer owed the state $40 million plus prejudgment interest. Centene has continued to fight the administrative and judicial rulings.
“Our top priority has always been ensuring Kentucky residents get the quality care they need,” Centene CEO Michael Neidorff said in a statement.