Former Cano Health CEO Marlo Hernandez faces a jury trial this week on fraud and corruption charges. The trial, set to begin Monday, will examine allegations that Hernandez used his position to illegally benefit himself and his family — actions that plaintiffs say contributed to Cano's bankruptcy.
This will be the first time Hernandez faces trial for alleged misconduct at the Cano company he founded in 2009.
The Miami-based company, a primary care provider focused on seniors, went public in a $4.4 billion SPAC merger in 2021. Last year, the company filed for Chapter 11 bankruptcy. The filing comes less than a year after three Kano board members publicly resigned in protest of its governance tactics. They left in March 2023, when the company's share price fell 80% in 12 months.
Most industry experts reacted to the bankruptcy filing with little surprise, arguing that it was a direct result of poor management, poor market selection and unrealistic growth strategies.
The plaintiffs in the trial Hernandez faces this week – Onsite Dental and its subsidiary CD Support – are seeking more than $72 million in damages.
They allege that Hernandez made multiple fraudulent misrepresentations that led to two major business transactions – totaling more than $30 million.
According to the complaint, Cano was supposed to partner with Onsite to open dental clinics within Cano's primary care facilities and pay the company guaranteed fees totaling hundreds of millions of dollars per month for 20 years.
Hernandez told Onsite that Cano was expanding its value-based care services, including dental services, and he wanted a partner to help expand those operations nationwide, said Joe Mamouna, one of the attorneys representing the plaintiffs.
The plaintiffs accuse Hernandez of lying about key facts, including Cano's financial status, internal approval of the contract and compliance with health care regulations. They said those misrepresentations caused Cano to later stop paying more than $5.5 million in invoices.
Their lawsuit accuses Hernandez of fraud, negligent misrepresentation, deceptive trade practices and unjust enrichment for misleading business partners and personally benefiting from them.
They claimed they invested millions of dollars in staff, equipment and infrastructure to open Kano-branded dental clinics, only for Kano to suddenly stop paying invoices. Because their agreement guaranteed fixed monthly payments, the funding disruption allegedly depleted their cash flow, forcing them to close operations, lay off employees and abandon dozens of clinics under construction.
According to findings, Hernandez allegedly used on-site dental transactions to “line his own pockets,” Mamouna said.
Hernandez did not respond. Medical City News'Requested comment.
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