Journal class

State Police Pension Fund, Others Settle Class Action

Members of a class action lawsuit, including the Oklahoma Police Pension and Retirement System, its building seen here, have agreed to a $23.5 million settlement with defendant Evolent Health. (Photo by Janice Francis-Smith)

The Oklahoma Police Pension and Retirement System (OPPRS) and other class action members have reached a $23.5 million settlement with Evolent Health.

“The Oklahoma Police Pension and Retirement System is proud of our work to hold Evolent accountable for its misconduct which resulted in losses for shareholders large and small,” read a statement released by the agency. ‘OPPRS when announcing the settlement on Monday.

The OPPRS, the Plymouth County Pension System and other plaintiffs were adversely affected when Evolent bought a majority stake in the nonprofit Passport Health Plan, Evolent accused of misleading investors. Under the settlement agreement, Evolent does not admit any wrongdoing.

The class action lawsuit accused Virginia-based Evolent, which provides clinical and administrative services to health systems, of making false and misleading statements and omissions in its purchase of a majority stake in Passport Health Plan based in Kentucky, a Medicaid insurance plan.

Court documents show Evolent shocked its investors when the company bought a 70% share of Passport for $70 million. Passport was already struggling financially after the state of Kentucky cut Medicaid rates for the Louisville area, where Passport did much of its business.

According to court documents, Evolent previously said it had no plans to buy Passport and that acquiring health plans was not part of its strategic objective.

“Furthermore, Evolent admitted that Passport was malfunctioning and not managed or managed properly, despite paying huge management fees to Evolent for what was previously understood by investors to be an aligned relationship,” it read. in a press release issued in 2019, when national law firm Saxena White filed the class action lawsuit against Evolent.

Fueled by assurances provided by Evolent regarding the deal, Evolent’s stock price rose from $13.65 to $28.75 over a nine-month period.

“Evolent’s entire business model hinges on its purported ability to significantly reduce healthcare and administrative costs for its customers,” but Evolent increased Passport’s costs, according to the lawsuit. Court filings claim Evolent charged Passport “grossly excessive fees and provided it with grossly deficient services”, hiring more than 70% of Passport’s workforce and then charging the company “exorbitant charges for exactly the same services that these employees were already rendering”. As a result, Passport’s costs rose at a rate more than 1,000% higher than its revenues, according to court filings.

When Passport’s true financial situation was exposed, Evolent’s stock price plummeted nearly 30%, according to court documents. By September 2019, the OPPRS had booked its estimated losses from the deal at $770,000.

A hearing will be held Nov. 18 in the United States District Court for the Eastern District of Virginia to determine whether the settlement should be approved as fair, reasonable and adequate. If approved, Evolent will pay $23.5 million, which will be deposited in an escrow account and distributed to class members and their attorneys.