WOODLAND HILLS— Woodland Hills based Health Net and St. Louis based Centene Corp. alongside their attorneys, face a $1.125 billion lawsuit filed on May 5 after allegedly scheming to deny insurance claims owed to Sovereign Health.
Sovereign Health, a former operator to nine mental health and substance abuse facilities in California and four other states before closing in 2018, filed a 30-page suit with U.S. District Court in Los Angeles alleging the defendants violated the Racketeer Influenced and Corrupt Organizations (RICO) Act.
RICO was established as a United States federal law in 1970 that outlines 35 offenses, punishable by extended criminal penalties for acts done by ongoing criminal organizations.
The suit alleges the Centene CEO Michael Neidorff worked with attorneys at Manatt, Phelps & Phillips to fall back on claims in order to recover $390 million in liabilities that weren’t fully disclosed when Centene merged with Health Net in 2016 in a $6.3 billion deal.
The defendants allegedly falsely accused Sovereign of fraud and used defaming tactics to coerce other companies to deny claims as a large-scale scheme to hide Health Net’s losses. The plaintiff is seeking $625 million plus interest accrued in damages and another $500 million in punitive damages.
As of now, representatives from Centene, Health Net and Manatt, Phelps & Phillips haven’t responded to requests for comments regarding the suit, and a court date has yet to be made official for the hearing.