Clover Health lawsuits: 7 shareholder fraud cases settled

Clover Health has settled the past seven lawsuits alleging that the Medicare Advantage insurer misled shareholders by hiding that it was the subject of a federal fraud investigation before its initial public offering.

The startup did not disclose what it has agreed to pay plaintiffs in civil lawsuits filed in federal courts in Delaware and Tennessee and state courts in Delaware and New York. The proposed settlement agreements require Clover Health to strengthen its oversight of corporate governance, the company announced in a news release Thursday. The settlements do not represent an admission of guilt and do not include payments in excess of the plaintiffs’ attorneys’ fees and expenses, according to the company.

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 initial public offering, 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 investigation and other information about its operations before 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 itself as a medical training company, was the second least profitable health insurer after Bright Health Group during the first quarter, when it posted a net loss of $72.6 million. Like Bright Health, Clover Health is considering a reverse stock split to increase its share price to $1 to remain listed on the Nasdaq Stock Exchange. Clover Health opened at 88 cents on Friday.