Quantcast

LOUISIANA RECORD

Friday, March 29, 2024

Louisiana Sheriffs' Pension & Relief Fund named lead plaintiff in Centene securities class-action suit

Fromeverystockphoto1280x640

New York Stock Exchange

ST. LOUIS — A Louisiana pension fund for the state's sheriffs has been named lead plaintiff in a putative class action against a Missouri-based healthcare company over allegations of securities violations.

Judge Audrey G Fleissig of U.S. District Court for Missouri's Eastern District approved a motion on May 1 to name Louisiana Sheriffs' Pension & Relief Fund as lead plaintiff in the class-action suit against Centene Corporation.

In its motion to be named lead plaintiff in the case, Louisiana Sheriffs' Pension & Relief Fund told the Missouri court that it has the largest financial interest in the outcome of the case. 

"The Motion is unopposed," Louisiana Sheriffs said in its April 11 filing that was approved Monday. "The only parties to file a response to Louisiana Sheriffs' motion are defendants, who 'take no position on the appointment of lead plaintiff or approval of lead counsel.'"

The case, until recently known as Israel Sanchez v. Centene Corporation, originally was filed in U.S. District Court for California's Central District on Nov. 14. On March 1, California U.S. District Court Judge Andre Birotte Jr. approved Centene's motion to change the venue to Missouri, holding that the location of Centene's headquarters wass relevant to the case.

While the case was in California, that court denied a previous motion by Louisiana Sheriffs to be named lead plaintiffs in the case. After venue in the case was transferred to Missouri, Louisiana Sheriffs renewed their motion.

The Missouri judge also approved the appointment of Bernstein Litowitz Berger & Grossmann as its lead counsel in the case with Cuneo Gilbert & LaDuca serving as liaison counsel for the class.

The lawsuit stems from Centene's acquisition last spring of Health Net Inc. Centene Corporation, a diversified multi-national healthcare company that provides programs and services to the under-insured and uninsured in the U.S., is headquartered in St. Louis.

The class-action suit claims that Centene made false and misleading statements about Health Net's insurance programs. Centene failed to reveal that Health Net's programs were significantly underperforming and were generating losses. Centene also allegedly overstated Health Net’s future financial prospects, according to the lawsuit.

In April 2016, Centene Corporation released its first quarter financial results that included its $6 billion acquisition of Health Net

"This strategic acquisition broadens our current service offerings, providing expansion in Medicaid and Medicare programs," Centene said in the announcement. "This acquisition provides further diversification across our markets and products through the addition of government-sponsored care under federal contracts with the Department of Defense and the U.S. Department of Veteran's Affairs, as well as Medicare Advantage. Our consolidated financial statements as of and for the three months ended March 31, 2016 reflect eight days of Health Net operations."

That sounded good to investors and resulted in artificially inflated prices for Centene shares, which reached as high as $75.39 per share, according to the lawsuit. 

"[The] plaintiff and other members of the class purchased or otherwise acquired the company’s securities relying upon the integrity of the market price of Centene’s securities and market information relating to Centene and have been damaged," the lawsuit said.

Days later, Centene filed a report with the U.S. Securities and Exchange Commission that it was reserving approximately $300 million for losses associated with Health Net’s insurance plan, according to the lawsuit. That news caused Centene’s shares price to fall more than 8 percent, closing at $68.87 per share on July 26, according to the lawsuit.

"Then on September 6, 2016, during the middle of the trading session, Leerink Partners LLC... issued a report downgrading Centene stock due to underperformance of the Health Net legacy insurance programs, including Health Net’s California substance abuse programs," the lawsuit said.

That caused Centene's shares price to fall another 5 percent, closing at $65.30 that same day, the lawsuit said.

The class-action suit seeks to represent those who acquired Centene securities between April 26 and Sept. 6, 2016 for alleged violations of the Securities Exchange Act of 1934.

More News