Canadian health insurer CCA has to reimburse $5.4 billion to its investors after the U.S. government said it had wrongly diagnosed the company as liable for an illness caused by the flu.
The government’s Office of Financial Management issued a memo to the company in March 2016 that it had determined that the company was in breach of the National Association of Insurance Commissioners Act, which prohibits insurers from offering coverage for illnesses caused by other conditions.
The OPM said CCA “failed to promptly and effectively disclose” its false diagnosis, which occurred in mid-2016.
The federal agency said the OPM had not determined that CCA had failed to report the illness, which could have resulted in millions of dollars in lost revenues.
The agency also said Cca failed to take steps to correct the mistake and to inform investors about the problem.
It is not the first time CCA, which was founded in 1894, has been caught in a financial crisis.
In 2017, it filed for Chapter 11 bankruptcy protection after it became the subject of a $10 billion class action lawsuit.