Clover Health has settled the last seven lawsuits alleging the Medicare Advantage insurer duped shareholders by concealing it was the subject of a federal fraud investigation ahead of its initial public offering.
The proposed settlement requires the startup to pay fees and expenses for plaintiffs’ attorneys tied to the civil lawsuits filed in federal courts in Delaware and Tennessee and state courts in Delaware and New York. The proposal also would require require Clover Health to strengthen its corporate governance oversight, the company announced in a news release Thursday. There was no admission of guilt.
Clover Health did not immediately respond to an interview request.
Clover Health entered the public markets in 2021 through a special-purpose acquisition company merger with Social Capital Hedosophia Holdings Corp. III, which valued 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 improperly billed Medicare Advantage. This revelation triggered a wave of lawsuits from shareholders accusing the company of covering up the federal probe and other information about its operations prior to going public.
In April, Clover Health agreed to pay $22 million to settle a securities fraud lawsuit. The same month, the company announced a restructuring plan and layoffs.
The insurer, which recently rebranded as a physician-enablement company, was the second-least profitable health insurance company after Bright Health Group during this year's first quarter, when it recorded a $72.6 million net loss. Like Bright Health, Clover Health is mulling a reverse stock split to raise its share price to $1 to remain listed on the Nasdaq Stock Exchange. Clover Health opened at 88 cents on Friday.
Correction: An earlier version of this story incorrectly stated Clover did not disclose what it agreed to pay plaintiffs.
