A ruling on Multiplan’s motion to dismiss in the Adventist Health case, filed in December of last year, faces further delays as the judge overseeing consolidated proceedings in the Northern District of Illinois aims to first iron out leadership roles for both “class action” and “direct action” claimants.
In a management conference held this morning following the centralization of six actions, US District Judge Matthew Kennelly scheduled a hearing for September 23 to select leadership structures for the various actions pending in the MDL, including the appointment of interim class action lead counsel and counsel to lead plaintiffs that do not seek class action status. Briefing on leadership proposals is due by September 9. The leadership structure will be appointed either at the hearing or the day after, Judge Kennelly said, and it is understood that, at that time, the court will establish a schedule for the filing of consolidated complaints and related motion practice.
“Judge Kennelly seems to be interested in moving these cases along in an expedited and orderly fashion,” CreditSights Head of Special Situations Legal Research Mark Lightner told LFI after today’s hearing.
To date, there have been 29 individual cases filed against the healthcare cost containment company, with the most recent filed last night by Pacific Inpatient Medical Group. Of the suits that have been filed, 12 are direct action cases with counsel suing only on behalf of their client, while the remaining 17 are purported class actions.
The latest developments in the MDL come on the heels of a legal win for Multiplan in a state-level proceeding that upheld the company’s demurrer, effectively dismissing a suit filed by Verity Health in 2021 predating a broader wave of federal cases alleging similar antitrust violations.
Multiplan’s $1.05bn 5.5% senior secured notes due 2028 last changed hands at 75 for a 14% yield, up from 66 on August 5 following its earnings report. Lower down in the capital structure, the $1.163 5.75% unsecured notes due 2028 have only posted modest gains, last trading at 45.75, following a drop to 43.75 from 54 on August 2 after reporting Q2 results.
Conversely, Multiplan’s $1.325bn (S+425) term loan B due 2028 began to move lower this week after Moody’s issued a downgrade to Caa1 from B3. The facility was last quoted 78-80, down from 80-82 on Monday, according to Markit.
While there are no looming near-term maturities in the company’s capital structure, the development of ongoing litigation could muddy the waters for an ordinary course of refinancing come 2027 when $3.325bn of its debt stack is set to mature, according to LFI’s previous reporting.
Earlier this month, CreditSights adjusted its recommendation on the credit, noting, among other risk factors, how potential legal costs are being underestimated by the company. “We believe there is a possibility that some anti-trust lawsuits may progress to discovery in the upcoming quarters, which would result in increased legal fees,” wrote CreditSights Senior Analyst, Special Situations Josh Kramer. “We estimate that fees could reach as high as $15mn a quarter if any of the anti-trust lawsuits progress to discovery.”
Veronica Graff
veronica.graff@levfininsights.com
+1 714 235 7326
