Former Cano Health CEO Marlow Hernandez is facing a jury trial this week over allegations of fraud and corruption. The trial, set to begin on Monday, will examine claims that Hernandez used his position to illicitly enrich himself and his family — actions the plaintiffs say helped drive Cano into bankruptcy.
This will be the first time Hernandez has faced trial for his alleged misconduct at Cano, which he founded in 2009.
The Miami-based company is a senior-focused primary care provider that went public in 2021 through a $4.4 billion SPAC merger. Last year, it filed for Chapter 11 bankruptcy. This filing came less than a year after three of Cano’s board members publicly resigned in protest of its governance strategy. They left in March 2023, when the company’s stock had dropped 80% in 12 months.
Most industry experts reacted to the bankruptcy filing without surprise, believing it to be a direct result of mismanagement, poor market selection and a quixotic growth strategy.
The plaintiffs in the trial Hernandez is facing this week — Onsite Dental and its subsidiary CD Support — are seeking over $72 million in damages.
They allege that Hernandez made multiple fraudulent misrepresentations that led them to enter into two major business deals — the sum of which totaled more than $30 million.
According to the complaint, Cano was supposed to partner with Onsite to open dental clinics inside Cano’s primary care facilities — as well as pay the company guaranteed monthly fees totaling hundreds of millions of dollars over twenty years.
Hernandez told Onsite that Cano was expanding its value-based care offerings to include dental services and that he wanted a partner to help scale those operations nationally, said Joe Mamouna, one of the attorneys representing the plaintiffs.
The plaintiffs allege that Hernandez lied about key facts, including Cano’s financial health, internal approval of the contracts and compliance with healthcare regulations. They say these 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 then personally benefiting from the arrangement.
They claim they poured millions of dollars into staffing, equipment and infrastructure to launch Cano-branded dental clinics, only for Cano to suddenly stop paying its invoices. Because their agreement guaranteed fixed monthly payments, that halt in funding allegedly wiped out their cash flow and forced them to shut down operations, lay off employees and abandon dozens of clinics in the middle of building them.
According to discovery, Hernandez allegedly used the Onsite Dental deal to “line his and his wife’s pockets,” Mamouna stated.
Hernandez did not respond to MedCity News’ request for comment.
Photo: tiero, Getty Images
