Managed-care company establishes $1.1 billion reserve related to talks with other states.
Centene Corp. said it settled claims from Ohio and Mississippi related to its pharmacy-benefit billing practices, and it is setting aside $1.1 billion to resolve similar issues with other states.
The big managed-care company said it will pay about $88 million to Ohio and $55 million to Mississippi. Ohio’s attorney general, Dave Yost, sued the company in March, alleging that it had misled the state’s Medicaid program about its pharmacy-related costs, resulting in overpayments by the state.
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Mississippi’s attorney general and auditor investigated similar issues, though the state hadn’t sued Centene. They said in a press release that the settlement “resolves allegations of overpayments as a part of Mississippi’s Medicaid program.”
Centene, which is based in St. Louis, said it admitted no fault in the settlements and denies any liability for the practices that the states examined. The company said that the issues that the states focused on occurred “primarily during 2017 and 2018” and it has since restructured its pharmacy benefits operations.
Several states are investigating pharmacy benefit managers’ disclosure and billing practices, generally focused on their Medicaid and state-employee plans. Pharmacy benefit managers typically work for employers and health plans, managing drug benefits and negotiating pricing with pharmaceutical companies and drugstores. They often have many lines of business that involve state governments, including handling the drug benefits of state employees and working with managed-care companies that administer Medicaid benefits.
The stakes for Centene are particularly high in the Medicaid-related probes because managing Medicaid coverage is a core business for the company. Ohio had deferred a decision about whether Centene could participate in its new Medicaid contracts for 2022, due to the litigation. The settlement is “reopening the door for [Centene] to receive a contract award” in Ohio, wrote Scott Fidel, an analyst at Stephens Inc.
Centene said it was negotiating with two law firms, Liston & Deas and Cohen Milstein, that are working with other states “in an effort to bring final resolution to these concerns.”
Centene says it has set aside $1.1 billion to cover settlements from similar lawsuits in other states.
Shares of Centene were lower on Monday after the healthcare insurer agreed to pay settlements to Ohio and Mississippi over claims that it inflated pharmacy costs.
Centene, the country’s largest seller of Medicaid health plans, will pay $88 million to Ohio and $55 million to Mississippi in restitution. The company denies liability for the practices for which it is settling.
Medicaid provides health coverage to eligible low-income adults, children, pregnant women, elderly adults and people with disabilities. Medicaid is administered by the states and funded jointly by the states and the federal government.
The company also said it reserved $1.1 billion to resolve similar claims in other states.
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A number of state attorneys general have brought litigation against the company related to the Envolve Pharmacy Solutions pharmacy-benefits subsidiary.
In March, Ohio sued, alleging the company’s Ohio subsidiary used a network of pharmacy benefits subcontractors to misrepresent pharmacy costs, leading to millions of dollars of overpayments by the Ohio Department of Medicaid.
America’s 24th-largest corporation Centene has agreed to pay Ohio $88 million to settle a lawsuit accusing the health-care giant of making off with millions of dollars meant to help the state’s most vulnerable residents.
The unusually rapid surrender by Centene on a lawsuit filed barely three months ago shows the stakes to even a $111 billion company with about 70,000 employees of Ohio’s hardline action — especially a freeze on the St. Louis-based outfit’s participation in a $20 billion contract to provide managed care services to 3.2 million Medicaid recipients.
The deal is expected to be announced Monday morning at a press conference by Ohio Attorney General Dave Yost.
Centene also has reached a separate $55 million settlement with Mississippi. The company does not admit fault in any of the deals, which are centered on its pharmacy benefit manager subsidiary, Envolve Pharmacy Solutions.
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Centene is the subject of similar investigations in other states. Authorities in Arkansas, Georgia, Kansas, New Mexico and several other states are looking into filing legal action against the conglomerate. America’s largest managed-care provider provides services to some 25 million across the country.
Centene has set aside another $1.1 billion for the other states, many of whom are represented by the same Mississippi law firm as Ohio, Liston & Deas and Cohen Milstein.
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The defendants in the Ohio suit are Centene and two wholly owned subsidiaries: Envolve Pharmacy Solutions and Buckeye Community Health Plan, which has provided managed-care services since 2004 for Ohio’s Medicaid program. Also involved is another offshoot of Centene, Health Net Pharmacy Solutions.
Centene Corp. has agreed to pay Ohio $88.3 million and Mississippi $55 million to end claims that its pharmacy benefits manager, Envolve Pharmacy Solutions Inc., overbilled state agencies, while setting aside an additional $1.1 billion, the health care company announced Monday.
Centene said in a filing with the U.S. Securities and Exchange Commission that no-fault agreements with the attorneys general resolve an Ohio state court suit and allegations from the state of Mississippi related to “services provided by Envolve” and its “structure and processes” in 2017 and 2018.
The company also announced that it has recorded a reserve estimate of $1.1 billion “related to this issue.”
Ohio Attorney General Dave Yost sued Centene and its subsidiary Buckeye Health Plan in March, accusing its pharmacy benefit manager of overbilling the Ohio Department of Medicaid for drugs.
Yost said Monday that the deal is the first, and largest, secured by a state against a PBM.
“Centene used sophisticated moves to bill unearned dollars — moves known only at the top levels of health care companies,” Yost said in a release. “It has taken a huge effort by my team to untangle this scheme — and now that we know how it works, the alarm bells should be ringing for anyone using similar tactics.”
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Ohio is represented by Don W. Davis Jr. of Brennan Manna & Diamond LLC, David Nutt of David Nutt & Associates PC, W. Lawrence Deas and William Liston of Liston & Deas PLLC, and Steven J. Toll and Christina D. Saler of Cohen Milstein Sellers & Toll PLLC.
Centene Corp. agreed to pay settlements to Ohio and Mississippi to resolve claims that it inflated pharmacy costs, and the health insurer reserved $1.1 billion to resolve similar claims in other states.
Centene, the country’s largest seller of Medicaid health plans, will pay $88 million to Ohio and $55 million to Mississippi, while denying any liability for the practices leading to the settlement, the company said Monday in a statement.
Ohio’s attorney general sued Centene in March, alleging that the company used a web of affiliated contractors to overcharge the state for the cost of medications provided to Medicaid beneficiaries. That litigation will be dismissed as part of the settlement, Centene said.
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PBMs negotiate discounts with drug suppliers and administer pharmacy networks for health plans. But the complexity of the arrangements has led to scrutiny of the business in recent years, as employers and states seek more transparency around prescription costs.
After investigating the state’s Medicaid pharmacy benefits expenses for years, Ohio recently restructured the way it contracts for PBM services.
Authorities in several other states, including Arkansas and Kansas, are investigating PBM practices and working with some of the outside attorneys involved in the Ohio lawsuit, according to public records.
Centene said it had reserved an additional $1.1 billion related to this issue and was in talks with plaintiffs led by the law firms Liston & Deas and Cohen Milstein to resolve similar concerns in other states.
Centene Corp. has agreed to pay Ohio $88.3 million to settle a lawsuit alleging the pharmacy benefit manager overbilled the state’s Medicaid department for pharmacy services it provided, the state’s top lawyer announced Monday.
Republican Attorney General Dave Yost said the settlement is the first and largest in the nation secured by a state attorney general against a pharmacy benefit manager. PBMs are third-party companies that manage health care plans, including Medicaid, which serves 2.9 million Ohioans.
Yost’s suit alleged Centene and its subsidiary, Buckeye Health Plan, conspired to misrepresent the costs of pharmacy services it provided Ohio, which included the prices of prescription drugs.
The attorney general said state investigators uncovered a sophisticated scheme to bill unearned dollars known only at the top levels of health care companies. Yost alleges a series of contract breaches, including double-billing, failing to disclose drug discounts that affected prescription costs and artificially inflating fees.
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Talks continue with a plaintiffs’ group “in an effort to bring final resolution to these concerns in other affected states,” the company said.
Investors in Tivity Health Inc. have asked a federal judge in Nashville to approve a $7.5 million settlement deal that would end claims that the health improvement company concealed that one of its most important customers, United Healthcare Inc., was developing a program that would compete with one of Tivity’s flagship offerings.
In a brief filed Thursday, lead plaintiff the Oklahoma Firefighters Pension and Retirement System asked U.S. District Judge Chief Judge Waverly D. Crenshaw Jr. for an initial nod on the multimillion dollar deal, noting that the agreement was struck as the matter was “only weeks from trial.”
Given the settlement’s substantial value and the risks inherent in bringing this complex securities class action to trial and possibly appeal, the settlement represents an excellent result for class members,” the investors told Judge Crenshaw.
Tivity investor Eric Weiner launched the action in November 2017. The latest version of the claims alleges that Tivity and three of its executives hid from the public that United Healthcare was developing a fitness program called Optum Fitness Advantage for Medicare patients that is much like Tivity’s SilverSneakers fitness program.
The investors allege that Tivity continued to represent that its relationship with United was fine as United was building out its Optum program, despite the fact that revenue from United made up 10% of Tivity’s total revenues and that a program like Optum could hurt Tivity’s chances of locking down a new contract with United.
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The investors are represented by Steven J. Toll, Daniel S. Sommers, Joshua C. Handelsman, Christina D. Saler and Jessica (Ji Eun) Kim of Cohen Milstein Sellers & Toll PLLC and J. Gerard Stranch IV and Benjamin A. Gastel of Branstetter Stranch & Jennings PLLC.
- Prior pay targeted in Google class action lawsuit
- State equal pay cases can be easier to prove
A California judge’s order allowing a class of 10,000 women to pursue pay discrimination claims against Google Inc. offers a roadmap for other plaintiffs seeking to tackle gender inequity in the workplace, in contrast to other battles against technology giants that failed to gain traction.
The Google case follows a similar ruling last year in a case against Oracle Corp., which also received class action status. The women in that case also survived a motion to dismiss from the tech giant earlier this year. Trials will likely be set for both lawsuits in 2022.
While these suits have moved forward, others have faltered. Workers’ attorneys say that there is still a path to reaching the critical class certification stage, despite a high bar the U.S. Supreme Court set with a 2011 decision that blocked 1.5 million female workers at Walmart Inc. from pursuing their discrimination claims as a group.
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In both the Google and Oracle cases, the attorneys sued under California’s equal pay laws, and targeted the companies’ use of job seekers’ prior pay to set compensation. This practice has been banned in a handful of states, advocates including the U.S. Equal Employment Opportunity Commission have said that because women are historically paid less than men, using their previous salary bakes in pay gaps.
‘Substantially Similar’
Female engineers at both Twitter Inc. and Microsoft Corp. failed to win class-action status for their gender-bias cases and those rulings were upheld on appeal in 2018 the U.S. Court of Appeals for the Ninth Circuit. Nike Inc. is facing an ongoing class action claim in Oregon federal court over pay and promotion practices, as well.
The Twitter and Microsoft cases were pursued under Title VII of the 1964 Civil Rights Act, and not federal or state Equal Pay Act statutes. Unlike the Google and Oracle cases, they also didn’t allege discriminatory pay based on a common policy of using prior salary history to set compensation.
Finberg said in some ways Equal Pay Act claims, both under federal and state law, are easier to certify than Title VII claims, which have a higher bar to prove discrimination took place. California’s law is more employee friendly, as well, he said, because it compares jobs that are “substantially similar” rather than “substantially equal.”
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Class Commonality
There is no question there have recently been additions to some state equal pay laws that make them more protective against pay disparities, said Joe Sellers, a Washington, D.C.-based partner at Cohen Milstein Sellers & Toll, who isn’t connected to the Google or Oracle class actions. Sellers represented the plaintiffs in the Walmart Stores, Inc. v. Dukes class action that went to the Supreme Court.
Sellers said the issue of using prior pay has been gaining greater scrutiny, but courts vary and some are more comfortable allowing employers to rely on that practice to set pay rates.
He said when a company has a common system for setting pay, that is a very important feature essential to class certification—and that’s consistent under federal Equal Pay Act claims, as well.
“The key to the certification of the claims was the common system for setting pay rates and data available for making comparisons for workers holding same or similar jobs and accounting for the factors that otherwise explain pay rates apart from gender,” he said.
Class certification is a key step, and the advanced study that the attorneys put forward for Google and Oracle cases show that an individual plaintiff would likely have a hard time putting together those resources for an individual pay claim.
“The failure to get a class certified, for most members of the class, is the end of their claims,” Sellers said. “Class certification itself is not so easy and courts have been raising that burden over the last 15 to 20 years.”
GreenSky investors have reached a $27.5 million settlement deal over allegations the lending technology company made misleading statements ahead of its initial public offering, according to documents filed in New York federal court.
A group of investors on Monday asked the court for preliminary approval of the deal, saying the two-year litigation had been hard-fought and the settlement amount was fair. The investors are led by Northeast Carpenters Annuity Fund, El Paso Firemen & Policemen’s Pension Fund, and the Employees’ Retirement System of the City of Baton Rouge and Parish of East Baton Rouge.
“The settlement represents a substantial portion of the potential provable damages suffered by the class,” the filing said, adding the agreement was reached in mediation and “only after the settling parties and co-lead counsel were well informed as to the strengths and weaknesses of the claims and defenses.”
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According to investors’ November 2018 complaint, GreenSky failed to adequately disclose that it was moving away from the more profitable solar-energy loans, where it was able to charge higher upfront transaction fees, and toward industries with lower fees.
An updated, consolidated complaint filed in June 2019 described the shift as “core financial information” that had a “seismic effect” on the company’s earnings, profitability and growth prospects.
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U.S. District Judge Alvin K. Hellerstein kept investors’ claims alive in November 2019 following oral arguments, and the investors won certification as a class in June 2020.
The proceedings have included “extensive” discovery involving over 4.4 million pages of documents, six depositions, and subpoenas to outside parties such as auditors and consulting firms, Monday’s filing said. The sides also went through mediation, ultimately settling on the $27.5 million figure in April, according to the filing.
The settlement amount reflects the risk of pursuing further litigation, in which the investors would have to overcome significant hurdles, the filing said.
“Although lead plaintiffs defeated the motions to dismiss, this was no guarantee as to continued success in the case,” the filing said. “Even if lead plaintiffs established defendants’ liability, lead plaintiffs would encounter significant loss causation defenses,” in which the company and its executives would look to distinguish between losses caused by the allegedly false statements and losses due to other factors, the filing said.
Steven J. Toll of Cohen Milstein Sellers & Toll PLLC, who helped represent the investors, said Tuesday he hopes the court will greenlight the settlement.
“I believe this is a very good recovery for the class given the potential damages and risks of litigation, and hope the court will agree and ultimately approve the settlement later this year after notice is given to the class,” Toll told Law360.
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The investors are represented by Steven J. Toll, S. Douglas Bunch, Jan Messerschmidt, Jessica (Ji Eun) Kim and Manuel J. Dominguez of Cohen Milstein Sellers & Toll PLLC and Max Schwartz and Tom Laughlin of Scott + Scott Attorneys At Law LLP.
GreenSky Inc. investors who accuse the fintech firm of misleading them about its 2018 initial public offering asked a federal judge in New York to grant preliminary approval to their $27.5 million settlement.
The deal represents almost 14% of the investors’ “estimated recoverable damages, discounted for certain potential defenses,” the class said in a memo filed in the U.S. District Court for the Southern District of New York in support of its motion for preliminary settlement approval.
“Settlements in this range of recovery (and indeed, well below this range) have routinely received approval,” the investors said. They pointed to other securities class suits describing average recoveries ranging from 3% to 7%.
The settlement class includes everyone who purchased GreenSky Class A common stock pursuant or traceable to the IPO, with some exceptions for those with close ties to the company, according to a stipulation and agreement of settlement filed Monday. Judge Alvin K. Hellerstein certified the investor class in June 2020.