Clover Health has settled seven previous lawsuits alleging that the Medicare Advantage insurer defrauded shareholders by hiding that it was the subject of a federal fraud investigation prior to its initial public offering.
The startup did not disclose how much it has agreed to pay plaintiffs in the 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 corporate governance oversight, the company announced in a news release on Thursday. According to the company, these deals do not represent an admission of guilt and do not include payment of plaintiffs’ attorneys’ fees and expenses above.
Clover Health did not immediately respond to a request for an interview.
Clover Health will hit the public markets in 2021 through a special purpose acquisition company merger with Social Capital Hedosophia Holdings Corp III, valuing the insurer at $3.7 billion.
A month after the IPO, activist investment group Hindenburg Research reported that the Justice Department was investigating whether Clover Health had improperly billed Medicare Advantage. The revelation triggered a wave of lawsuits from shareholders accusing the company of covering up federal investigations and other information about its operations before they went public.
The insurer, which was recently rebranded as a physician-enabled company Second least profitable health insurance company after Bright Health Group during the first quarter, when it recorded Net loss of $72.6 million, like radiant health, Clover Health is considering a reverse stock split to increase its share price to $1 in order to remain listed on the Nasdaq stock exchange. Clover Health opened on Friday at 88 cents.