Former Cano Health CEO Marlow Hernandez is dealing with a jury trial this week over allegations of fraud and corruption. The trial, set to start on Monday, will study claims that Hernandez used his place to illicitly enrich himself and his household — actions the plaintiffs say helped drive Cano into chapter 11.
This would be the first time Hernandez has confronted trial for his alleged misconduct at Cano, which he based in 2009.
The Miami-based firm is a senior-focused main care supplier that went public in 2021 by way of a $4.4 billion SPAC merger. Final yr, it filed for Chapter 11 chapter. This submitting got here lower than a yr after three of Cano’s board members publicly resigned in protest of its governance technique. They left in March 2023, when the corporate’s inventory had dropped 80% in 12 months.
Most trade specialists reacted to the chapter submitting without surprise, believing it to be a direct results of mismanagement, poor market choice and a quixotic progress technique.
The plaintiffs within the trial Hernandez is dealing with this week — Onsite Dental and its subsidiary CD Assist — are in search of over $72 million in damages.
They allege that Hernandez made a number of fraudulent misrepresentations that led them to enter into two main enterprise offers — the sum of which totaled greater than $30 million.
In keeping with the criticism, Cano was speculated to companion with Onsite to open dental clinics inside Cano’s main care amenities — in addition to pay the corporate assured month-to-month charges totaling lots of of tens of millions of {dollars} over twenty years.
Hernandez instructed Onsite that Cano was increasing its value-based care choices to incorporate dental providers and that he wished a companion to assist scale these operations nationally, mentioned Joe Mamounas, one of many attorneys representing the plaintiffs.
The plaintiffs allege that Hernandez lied about key details, together with Cano’s monetary well being, inner approval of the contracts and compliance with healthcare laws. They are saying these misrepresentations prompted Cano to later cease paying greater than $5.5 million in invoices.
Their lawsuit accuses Hernandez of fraud, negligent misrepresentation, misleading commerce practices, and unjust enrichment for deceptive enterprise companions after which personally benefiting from the association.
They declare they poured tens of millions of {dollars} into staffing, tools and infrastructure to launch Cano-branded dental clinics, just for Cano to all of a sudden cease paying its invoices. As a result of their settlement assured fastened month-to-month funds, that halt in funding allegedly worn out their money stream and compelled them to close down operations, lay off staff and abandon dozens of clinics in the course of constructing them.
In keeping with discovery, Hernandez allegedly used the Onsite Dental deal to “line his and his spouse’s pockets,” Mamounas acknowledged.
Hernandez didn’t reply to MedCity Information’ request for remark, however in court docket filings has denied the allegations.
Photograph: tiero, Getty Photos
