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Centene Corp.-Health Net Scandal: The Enron of the 21st Century?

11-10-17 Category: Treatment

Centene Corp.-Health Net Scandal: The Enron of the 21st Century?

Bilking treatment centers, refusing patient care, duping shareholders routine at mega insurer

In 2001, the Enron scandal shook the nation. Reporters revealed that executives at the huge energy corporation were embezzling millions of dollars from – and reporting fraudulent earnings to – investors. Senior management had deliberately inflated the value of the company’s holdings to dupe stockholders. Meanwhile, Enron executives were laughing all the way to the bank; the top 140 senior staffers were pulling in a combined salary of a whopping $680 million, $100 million of which went to top earners Enron Chairman Kenneth Lay and CEO Jeffrey Skilling ($67.4  million and $41.8 million, respectively).

The Enron scandal was the mother of white collar crimes, sending shock waves across the business community and drawing the outrage of the American public. By the time the dust settled and the company went bankrupt, investors had lost over $70 billion, trustees and employees lost more than $2 billion and thousands of people lost their jobs. The top executives, however, didn’t lose a dime. They had sold their shares before the company crashed and burned.

Unfortunately, we’re not done with outsized white collar criminal behavior. In fact, new and unsavory business practices have emerged from the very industry we entrust with our well-being. Certain health insurance companies are scamming the patients they cover and the investors who hold their stock. Big time.

The Centene-Health Net Scandal

Centene Corporation, is a large, publicly-traded company and a huge health care enterprise that serves as a major intermediary for both government-sponsored and privately-insured health care programs. In 2016, Centene purchased another insurer, Health Net, Inc., which provides health benefits to approximately 5.9 million individuals in all 50 states.

Shortly before the two companies merged, however, Health Net stopped authorizing treatment for, and making payments to, mental health/addiction treatment providers in California and other Western states. Thousands of authorizations were denied via ‘robo’stamps – electronically-generated decisions made without even reviewing a patient’s chart or taking into consideration his/her medical history. These payments were refused for services already rendered (and pre-approved by Health Net); the company also asked for an inordinate amount of paperwork to back up every single claim submitted.

In conjunction with shirking its responsibility to pay for health care services rendered by providers, Health Net suddenly launched a dragnet of all addiction treatment providers whose bills they refused, as an excuse to not pay them at all. In the end, these actions were a ruse to save money and to appear more profitable to their merger, Centene Corp.

Concealing $300 million of debt, Centene-Health Net misled their shareholders; when revealed, it led to an abrupt loss of market value of nearly $1 billion. That’s billion. When the truth came out, shareholders of Centene, which is a Fortune 500 company, filed a class action lawsuit against Centene, its CEO Michael F. Niedorff, and its CFO Jeff Schwaneke for falsifying financial records and hiding the accounts payable on which it refused to pay.

Prior to the merger with Centene, Health Net already had a track record of individual and class action lawsuits filed against it for bad faith practices. The company was also in trouble with the Securities Exchange Commission for stifling whistleblowers. Yet Niedorff was still able to convince shareholders that acquiring Health Net would be a good idea. Former Centene CFO, Bill Scheffel, must have known what was going to happen; he resigned when the merger between Centene and Health Net was finalized.

Similar to Enron executives, senior management at major health insurance corporations are also living large, at the expense of other’s misfortune. A recent analysis of health insurance executive salaries showed that the industry’s top 70 executives made $2 billion in 2015. CEO salaries averaged $20 million per year. Centene-Health Net’s CEO, Michael F. Niedorff, made the most of all, topping out at $22 million last year. The same year, median household income was $55,775 per year, which is what these insurance executives make in less than a day. No wonder President Trump wants to stop giving Centene and other insurers billions of taxpayer dollars in bailouts; that money could be used to pay directly for care rather than lining the pockets of criminal organizations.

The myriad lawsuits against Centene are winding their way through the courts in this modern-day Enron scandal. Nevertheless, shares are trading at around $94.23 and the company expects 2017 revenue in the billions. The questions is, does that estimate include all debts, fines and lawsuit settlements Centene may be facing? Is this company, with its long history of bad faith practices, telling the truth about its worth?

Eventually, Centene’s bubble will burst. Having made huge profits after merging with Health Net, Centene is now seeking to acquire New-York based Fidelis Care, while boldly refusing to pay huge debts owned from its previous acquisition. The Addiction Treatment Advocacy Coalition (ATAC) organized a protest, sending a petition letter to New York Attorney General Eric Schneiderman to warm him of Centene’s dubious business practices and complete disregard of its legal, financial, and ethical responsibilities. Such greed and arrogance is exactly what led to the fall of Enron.

White-Collar Crime Is Spiking

According to the Legal Information Institute, “White-collar crime”  is defined as “crime committed by a person of respectability and high social status in the course of his occupation,” and is “generally committed by business and government professionals.”

America is in the throes of a white-collar crime crisis across many industries. People feel that the country is owned and operated by white collar criminals, despite the corporate-owned media telling them otherwise.

In his book, “Masters of Deception,” former Special Agent and Intelligence Officer with the U.S. Department of State author Louis Mizell explains, “White-collar crime is an alarming epidemic that has reached every big city and small town in America. Invading all sectors, from health care and religion to law and education, it claims millions of victims, and bilks taxpayers out of billions of dollars every year.” When white-collar criminals gain control over the people’s health care, the results can be fatal.

Corporate Crime In Addiction Treatment Kills

The 2008 Mental Health Parity and Addiction Equity Act requires insurers to cover mental health and substance abuse treatment at “parity” – that is, equal to – other types of essential medical services in small group and individual market plans. As a result, millions of Americans can obtain coverage for addiction treatment and mental health services.

In response to this legislation, Health Net took extraordinary measures—they simply refused to pay providers for all claims related to addiction treatment and mental health services.

In response to this and similar actions of insurers, White House Opioid Commission member and former Rhode Island congressman Patrick Kennedy recently gave a group of insurance executives a harsh lecture saying, “The historic treatment of addiction and mental illness has been a separate and unequal process. All of you, as insurers and payers, have treated mental health and addiction as if it’s something other than the rest of medicine.”

The commission’s preliminary report, released in July of 2017, called for the president to declare the opioid crisis a national emergency, which would free up funds to help people who can’t afford treatment. In the meantime, an average of 55 people die each day while scores more languish in agony with no treatment and no hope of getting it. Changes to Obamacare, which 60 percent of people receiving addiction treatment are using to afford care, threaten to add new bodies to the projected 70 million who will succumb to drug addiction this year. It is an outrage that insurer’s do not want to fulfill their legal and moral obligation to pay the bills for addiction treatment. These practices must stop so the healing can start.

About Sovereign Health

Sovereign Health is a leading mental health facility, specializing in the treatment of addiction, mental illness, and dual diagnosis. Using evidenced-based medicine and measurement-based care, we provide the highest standard of care from assessment to discharge through our highly experienced, professionally licensed staff. We specialize in detox from  alcohol and drug dependency, trauma, mental illness, eating disorders and other conditions. Every Sovereign Health location offers residential treatment and other levels of care. Our mental health clinic offers outstanding outpatient care. We accept most major insurance plans and financing is also available through If you or a loved one is struggling with addiction, please call our 24/7 helpline today.

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