Clover Health is settling one of several class action lawsuits that accused the insurtech of misleading investors and committing securities fraud preceding its initial public offering in 2021.
Under an agreement reached April 21, the class will receive $22 million dollars, according to a news release. Clover will use $19.5 million in insurance funds and $2.5 million out-of-pocket to fund the settlement — the company also said it is suing its insurers in Delaware to receive payment funds.
The class action complaint was originally filed in February 2021 and partly accused Clover of concealing an active investigation by the Department of Justice into the company's software offering, Clover Assistant. The complaint alleged 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 settlement is subject to definitive documentation and final court approval. Clover has denied all wrongdoing. Parallel lawsuits are ongoing in Delaware, New York and Tennessee.