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Clover Health insurance class action settlement overview:
- Who: Clover Health Investments Corp. has agreed to a class action settlement to resolve claims brought against it by its investors.
- Why: The settlement resolves claims Clover Health covered up a DOJ probe while preparing to go public via a merger with a special-purpose acquisition company.
- Where: The lawsuit was filed in Tennessee federal court.
Clover Health Investments Corp. has agreed to pay $22 million to resolve claims it covered up a probe from the U.S. Department of Justice while it was preparing to go public via a merger with a special-purpose acquisition company.
Clover Health, a Medicare Advantage insurance provider, revealed it would go public in October 2020 after announcing that it had reached a $3.7 billion deal with Canadian-American venture capitalist Chamath Palihapitiya.
Investors argued, however, that Clover had been covering up a DOJ probe looking into if the company had possibly violated the False Claims Act, and that, once revealed in a short-seller’s report, Clover shares dropped by around 12%, reports Law360.
Clover, in a filing with the U.S. Securities and Exchange Commission Monday, said it plans to use $19.5 million of the settlement funds from insurance proceeds that “have been advanced or have been committed to be advanced by the Company’s insurers to fund the settlement.”
Clover expects to pay out-of-pocket for $2.5 million of settlement funds
The company said it has sued “certain of its insurers” in Delaware federal court, meanwhile, in order to secure the full payments of all of its liabilities that are related to the securities litigation, reports Law360.
Clover, which is not admitting to any liability or wrongdoing, said in the SEC filing that it expects to pay the remaining $2.5 million settlement funds out-of-pocket, and that, as of the end of last year, has recorded a reserve of $500,000.
In other news involving a DOJ probe, it was reported last November that the agency, along with the SEC, are investigating Wells Fargo’s diversity hiring practices.
Are you a Clover investor who was injured when the DOJ probe was revealed? Let us know in the comments!
The plaintiffs are represented by Jeremy A. Lieberman, Brian P. Calandra and Patrick V. Dahlstrom of Pomerantz LLP, Paul Kent Bramlett, and Robert Preston Bramlett of Bramlett Law Offices, Brian Schall and Rina Restaino of The Schall Law Firm, and Corey D. Holzer and Marshall P. Dees of Holzer & Holzer LLC.
The Clover Health insurance class action lawsuit is Bond, et al. v. Clover Health Investments Corp., et al., Case No. 3:21-cv-00096, in the U.S. District Court for the Middle District of Tennessee.
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