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Centene accused of 'plundering' company it bought for $70M

The claims from Daniel Blakeley concern Centene's 2017 purchase for $70 million of his Foundation Care LLC
Credit: UPI
Centene the Health insurer, has announced plans to eliminate 3,000 workers and 1,500 open positions after recording a fourth-quarter loss of $12 million, in Clayton, Missouri on Thursday, February 11, 2021. The Centene headquarter complex is pictured in Clayton, Missouri. Photo by Bill Greenblatt/UPI

ST. LOUIS — The part-owner of a compounding pharmacy purchased by Centene Corp. (NYSE: CNC) says the Clayton health care giant engaged in "pillaging and plundering" of its assets, devaluing his remaining stake in the firm.

The claims from Daniel Blakeley, of Wildwood, concern Centene's 2017 purchase for $70 million of his Foundation Care LLC, through Centene's AcariaHealth, its own specialty pharmacy firm. He and two family trusts are suing Centene, AcariaHealth and Foundation Care in St. Louis County Circuit Court. As part of the transaction, Blakeley sold a 30% equity interest in Foundation Care, while Michael Schultz sold all of his 50% interest, the suit says. Schultz isn't a party to the litigation.

Centene and Blakeley didn't immediately respond to requests for comment. Blakeley is represented by attorney David Helms.

The suit describes Foundation Care's business as involving the distribution of drugs for cystic fibrosis, "along with unique services for poorly served patients," making it attractive to Centene, which "had not been able to acquire many of these agreements."

The suit says that following the deal, Blakeley retained a 20% stake in Foundation Care, worth $14 million, because of representations that Centene would work in the company's interest and increase its value. Blakeley was to continue as president of Foundation Care for at least three years, with reduced compensation, while AcariaHealth acted as manager, the suit says.

But despite pitching Blakeley on plans for Foundation Care's growth, AcariaHealth set up a structure in which it borrowed money from Centene and was charged for corporate overhead, the suit says. That cost was more than if Foundation Care performed the functions on its own, it says. Centene also poached "well-trained" Foundation Care employees for other companies, discontinued lines of business it had committed to maintaining and growing, and reduced and eliminated patient services such as emailing and texting, it added. 

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