Private equity company Endeavour Capital, which is ZoomCare’s largest outside investor, is asking an Oregon court to keep the clinic chain open.
Endeavour Capital filed suit seeking a temporary restraining order, which Multnomah County Circuit Court Judge Jerry Hodson denied. Instead, the judge will hear Endeavour’s request that Zoom clinics go into receivership.
Endeavour, which invested $61 million into Zoom, is trying to get a receiver to take charge of the healthcare company.
Zoom+Care, a healthcare startup in the Pacific Northwest, combined clinics and insurance. The company planned to expand in 2016, including a “super clinic” that was an alternative to emergency care. Company officials spoke positively of changing healthcare with a focus on younger members.
But only a year later, the company’s major investor is suing and the FBI is investigating the startup for “retroactively falsified medical claims to avoid paying” Affordable Care Act (ACA) risk adjustment payments. The investigation revolves around whether Zoom falsified medical claims to make its members look less healthy, so the company wouldn't have to pay as much for risk adjustment.
The healthcare startup already dissolved its insurance operations and Oregon has taken its insurance arm into receivership. Last month, the Oregon Department of Consumer and Business alleged that Zoom Management led state regulators to believe Zoom Health was going to get a $3 million injection of capital at the end of 2016. But that never happened, The Oregonian reported.
The ACA requires payers with healthier members to make risk adjustment payments to offset other payers' sicker members.
ZoomCare has additionally been receiving poor employee reviews on Glassdoor. Recent review headlines include titles such as "Obvious Fake Review!," "Run Away!," and "Executive Management turns Great Model into Sinking Ship."
Investor activity is heating up across all sectors, not just the healthcare industry. If companies can't manage to make returns on investment, then they should expect shareholders to get more involved.