A pair of pension funds investing in health care company Centene sued the company Friday, claiming it concealed financial problems with its $6.8 billion acquisition of Health Net, including Health Net’s liability for over $1 billion in California taxes.
This resulted in millions of dollars in damages to Centene shareholders after the company overpaid for Health Net, and “serious harm” to Centene’s reputation, plaintiffs Carpenters Pension Fund of Illinois and Iron Workers Local 11 Pension Fund claimed in their stockholder derivative suit.
Centene purchased Health Net for $78.59 per share of its stock in 2016. The failure of its officers to disclose the true state of its acquisition’s financial issues led to “materially misleading” valuations of the company that were sent to Centene investors, plaintiffs said.
Centene’s officers failed to notify its shareholders of a California taxpayer suit filed against Health Net, the plaintiffs claimed. The lawsuit was so consequential that one state legislator called it “monumental” to the state’s taxpayers, they said.
. . .
Centene’s officers committed “serious abdications” of their fiduciary duties by ignoring and concealing material information about Health Net’s business, said Carol Gilden, the lead attorney for the plaintiffs, in an email Monday.
“Directors who fail to exercise their fiduciary duties owed to the company must be held accountable for the harm they have caused,” she said.
The complete article can be accessed here.