8-KMaterial Agreements

CENTENE CORP 8-K Report, Material Agreement (Sep 8, 2005)

Filed September 8, 2005For Securities:CNC

Summary

Centene Corporation (CNC) has filed an 8-K report detailing the settlement of a material legal dispute with Aurora Health Care, Inc. (Aurora). The dispute, concerning reimbursement for medical professional services provided to Centene's Wisconsin health plan subsidiary, Managed Health Services Insurance Corporation, dates back to 1998. Following legal proceedings and a court ruling in favor of Aurora, Centene entered into a settlement agreement on September 1, 2005. This settlement involves a total payment of $9.5 million to Aurora. Importantly for investors, $5.0 million of this amount is covered by previously established reserves. The remaining $4.5 million will be recognized as a one-time pre-tax charge in the third quarter of 2005. The agreement also sets reimbursement rates for ambulatory surgery services through December 31, 2005, and commits both parties to good-faith negotiations for a new long-term contract effective January 1, 2006. This resolution addresses a significant legal overhang and provides clarity on future contract terms.

Key Highlights

  • 1Centene Corporation settled a lawsuit with Aurora Health Care, Inc. related to reimbursement for medical professional services.
  • 2The settlement agreement was finalized on September 1, 2005.
  • 3Centene will pay Aurora a total of $9.5 million to resolve the dispute.
  • 4$5.0 million of the settlement payment is covered by existing reserves.
  • 5A one-time pre-tax charge of $4.5 million will be recorded in the third quarter of 2005 for the remaining settlement amount.
  • 6Rates for ambulatory surgery services are agreed upon through December 31, 2005.
  • 7Centene and Aurora will negotiate a new long-term contract for services starting January 1, 2006.

Frequently Asked Questions

Aurora Health Care filed a lawsuit against Centene's Wisconsin health plan subsidiary, Managed Health Services Insurance Corporation, alleging inadequate reimbursement for medical professional services rendered from 1998 to the present, specifically focusing on ambulatory surgery services.

The total settlement payment to Aurora Health Care is $9.5 million.

Of the $9.5 million settlement, $5.0 million was covered by existing reserves. The remaining $4.5 million will be recognized as a one-time pre-tax charge in the third quarter of 2005, impacting earnings for that period.

The settlement agreement establishes agreed-upon rates for ambulatory surgery services through December 31, 2005. Furthermore, both Centene and Aurora have committed to negotiating in good faith for a new, long-term contract to commence on January 1, 2006, providing a path towards continued operational collaboration.