Centene pays out $88M to settle suit
Health-care giant gives up after only 3 months
One of the biggest lawsuit settlements in Ohio history should send a message to all pharmacy benefit managers and health-care companies taking advantage of patients and taxpayers: “Everybody’s accountable,” says Attorney General Dave Yost.
“I hope that a message is going out to the entire industry across the country that the days of operating behind the curtain as the Great Oz are over, and you’re working for the people of these states that hired you,” he said during a news conference to detail an $88.3 million resolution to a lawsuit against Centene, America’s 24th-largest corporation.
To underscore the enormity of Monday’s settlement, the $111 billion company with about 70,000 employees also agreed to pay $55 million to Mississippi, which was probing similar allegations, and another $1.1 billion for other states in the same situation.
The unusually rapid surrender by Centene on a lawsuit filed just over three months ago shows the huge stakes for the health-care giant — especially a freeze on the St. Louis-based outfit’s participation in a $20 billion contract to provide managed care services to 3.2 million Ohio Medicaid recipients.
The status of that contract remains in limbo.
Lisa Lawless, communications director for Ohio Medicaid, said, “Medicaid’s procurement decision related to
(a Centene subsidiary) remains in deferred status. We are continuing our assessment.”
Word of Ohio’s action had spread rapidly across the country, a nightmare for America’s largest managed-care provider, which covers some 25 million in the U.S.
Centene approached the state, asking “what’s it going to take to resolve this matter?” Yost said. The company does not admit fault in any of the deals, which are centered on its pharmacy benefit manager subsidiary, Envolve Pharmacy Solutions.
The Centene settlement with the Ohio attorney general falls just shy of the amount paid by Volkswagen, about $90 million starting in 2016 to resolve a suit over deceptive sales and marketing practices.
Investigations by other states lead Centene to prepare for payouts
Yost said Ohioans should take hope in the successful resolution of litigation against one of the biggest companies in the world.
“We live in a time where there’s a sense that If you’re rich enough, if you’re big enough, if you’re connected enough, if you’re a politician, that you can get away with stuff,” he said.
“The attorney general’s office is here to make sure that’s not true.
It doesn’t matter to me how big you are; it doesn’t matter to me how much power you have; it doesn’t matter to me about the politics. The same rules for everybody.”
Centene notified shareholders and the Securities and Exchange Commission
of the Ohio settlement Monday morning.
“We respect the deep and critically important relationships we have with our state partners,” said Brent Layton, Centene’s president of health plans, markets and products, in a statement.
“These agreements reflect the significance we place on addressing their concerns and our ongoing commitment to making the delivery of health care local, simple and transparent. Importantly, putting these issues behind us allows us to continue our relentless focus on delivering high-quality outcomes to our members.”.
“I suspect there will be other states following Ohio’s lead,” Yost said.
Ohio gets favored treatment for first to file, settle lawsuit
Ohio is receiving a 7.5% premium for being the first state to file litigation, said Yost. Other states will get 5.5%.
The Buckeye State also is receiving “most favored nation” status, meaning if any other state works out a better deal with Centene, Ohio will get the same arrangement. “There will be no state that has a better outcome than Ohio,” Yost said.
At least half of the settlement will go to the federal government, which pays for a substantial portion of Medicaid services in the federal-state health insurance program for the poor, blind and disabled.
And the four outside law firms are getting 5% of the settlement, or a little more than $4.4 million.
The rest will go to Ohio Medicaid: half within 45 days, the other half within a year.
The defendants in the Ohio suit are Centene and two wholly owned subsidiaries: Envolve and Buckeye Community Health Plan, which has provided managed-care
services since 2004 for Ohio’s Medicaid program. Also involved is another offshoot of Centene, Health Net Pharmacy Solutions.
Conspiracy, cover-up, overcharges among state lawsuit allegations
The defendants engaged “in a conspiracy to wrongfully and unlawfully obtain ... tens of millions of dollars” in Medicaid payments meant for Ohio’s most vulnerable residents, the lawsuit says.
“The conspirators’ actions were undertaken with the specific intent and purpose to wrongfully increase the profits of the conspirators, which all flowed to a common destination — Centene’s bank account . ... Centene, Buckeye and Envolve secretly retained these monies
for themselves to pad Centene’s profits at the expense of the taxpayers of the state of Ohio.”
Prepared with the help of lawyers in Mississippi and Akron, the litigation outlines “an opaque and multi-layered billing process” set up to hide the profiteering from Ohio Medicaid officials.
A key aspect of the Centene setup was revealed by The Dispatch in October 2018 as part of the Side Effects investigation.
Still pending are lawsuits by Yost’s office against Cigna’s Express Scripts, accused of overcharging the State Highway Patrol Retirement System, and Unitedhealth’s Optumrx, accused of gouging the Ohio Bureau of Workers’ Compensation. drowland@dispatch.com @darreldrowland