Clover Health must face lawsuit alleging it misled investors

A judge denied a motion to dismiss a lawsuit out of Nashville, Tenn., that accused Clover Health of misleading investors, according to a Feb. 28 court order. 

The initial 150-page amended complaint emphasizes five ways the payer allegedly misled investors:

1. The payer is accused of committing "multiple legal and regulatory violations," including actions that required the Justice Department to open an investigation on if the payer violated the False Claims Act.

2. Clover's financial success was tied to kickbacks, including to providers and office staff.

3. Only a handful of contracted providers used Clover Assistant, the payer's flagship platform. 

4. The payer failed to achieve generally accepted accounting principles on financial reports by failing to include certain material transactions. 

5. Clover's SEC filings violated regulatory standards. 

The complaint also alleges that Clover Assistant would identify opportunities to increase a patient's Medicare risk score and "nudge" physicians to update a patient's chronic conditions. The platform would also suggest using "old or stale diagnoses that were no longer relevant," resulting in increased risk scores and, therefore, increased federal reimbursement. 

A Clover spokesperson told Becker's that the company does not comment on pending litigation. 

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