Prior to founding Clover, CEO Vivek Garipalli owned 3 New Jersey hospitals through a company called CarePoint Health.
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Clover’s CTO left 6 months before the first release of the supposed “disruptive” Clover Assistant software in July 2018 (likely a sign that development wasn’t going great.) Clover’s executive team has been in turmoil, with 3 CFOs, 3 COOs, and 2 General Counsels in the last 4 years.
Doctors at key Clover providers described the software as “embarrassingly rudimentary”, “a waste of my time” and as just another administrative hassle to deal with.
Physicians are paid $200 per visit to use the software, twice the normal reimbursement rate for a Medicare visit.
Clover claims its software “delights” physicians, but according to doctors and former employees we interviewed, they use it because Clover pays them extra to use it.
We provide detail on how the software captures and retains irrelevant diagnoses, which we believe deceives the healthcare system, and poses a significant regulatory risk.
Multiple former employees explained that Clover’s software is primarily a tool to help the company increase coding reimbursement.
A former employee explained to us that the DOJ is specifically asking about upcoding, or the practice of overbilling Medicare.
In a CNBC interview announcing the Clover transaction, Chamath proclaimed, unprompted, “they create transparency…they don’t motivate doctors to upcode or do all kinds of things to get paid”.
The Clover contract was quietly put into his wife’s name in the weeks after Clover’s go-public announcement.
One of the former employees explained that Clover’s Head of Sales took efforts to conceal the relationship by putting it in his wife’s name “for compliance purposes”.
One former employee estimated Bermudez drove ~68% of Clover’s total sales, though was unclear on the amount coming from the undisclosed relationship.
Multiple former employees explained that much of Clover’s sales are fueled by a major undisclosed relationship between Clover and an outside brokerage firm controlled by Clover’s Head of Sales, Hiram Bermudez.
Its activities are also under investigation by the DOJ. We work for you”, despite literally being owned by Clover, an insurance company. It claims, “We don’t work for insurance companies. Seek makes no mention of its relationship with Clover on its website yet misleadingly advertises to seniors that it offers “independent” and “unbiased” advice on selecting Medicare plans.
Clover has a thinly-disclosed subsidiary called “Seek Insurance”.
A former employee told us the fine was so small it just emboldened Clover to push the envelope further. The fine was issued after Clover’s repeated failure to amend misleading statements about its plan offerings.
These practices should not come as a surprise, given that in 2016, Clover was fined for misleading marketing practices by the Centers for Medicare & Medicaid Services (CMS).
We found that much of Clover’s sales are driven by a major undisclosed related party deal and misleading marketing targeting the elderly.
Clover claims that its best-in-class technology fuels its sales growth.
Our research indicates that the investigation has merit.
This Civil Investigative Demand and the corresponding investigation present a potential existential risk for a company that derives almost all of its revenue from Medicare, a government payor.
Critically, Clover has not disclosed that its business model and its software offering, called the Clover Assistant, are under active investigation by the Department of Justice (DOJ), which is investigating at least 12 issues ranging from kickbacks to marketing practices to undisclosed third-party deals, according to a Civil Investigative Demand (similar to a subpoena) we obtained.
Our investigation into Clover Health has spanned almost 4 months and has included more than a dozen interviews with former employees, competitors, and industry experts, dozens of calls to doctor’s offices, and a review of thousands of pages of government reports, insurance filings, regulatory filings, and company marketing materials.
Today, we reveal how Clover Health and its Wall Street celebrity promoter, Chamath Palihapitiya, misled investors about critical aspects of Clover’s business in the run-up to the company’s SPAC go-public transaction last month.