Munjal Shah when he changed into CEO of Health IQ in 2017. On the time, the firm promised it might per chance dealer better lifestyles insurance protection rates for the “health aware.”
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The mission agency made a repeat investment in Munjal Shah, but his earlier firm Health IQ is facing allegations of millions in unpaid invoices, millions in debt — and one lawsuit is alleging fraud.
InWould possibly maybe per chance, Andreessen Horowitz same earlier accomplice Julie Yoo urged Forbes the agency changed into being “very rigorous about selecting easy strategies to opt our bets” within the generative AI dwelling. That’s why Yoo and fellow accomplice Justin Larkin made up our minds to manual a $50 million seed investment on the side of Total Catalyst within the digital health startup Hippocratic AI. It changed into a brand new firm but a repeat founder for Andreessen: Munjal Shah.
Her agency made up our minds to back Shah all once more, Yoo acknowledged, on story of Shah knew easy strategies to feature within the highly regulated healthcare dwelling, contend with sensitive patient info and land contracts with fundamental insurance protection companies. All this stemmed from his journey as the cofounder and CEO of the Medicare brokerage Health IQ, which Andreessen had beforehand invested in. Shah, Yoo acknowledged, changed into “literally inserting out in our places of work when he changed into first ideating his subsequent adventure.”
However a raft of litigation filed from December 2022 to Would possibly maybe per chance 2023 in opposition to the firm the place apart Shah seemingly earned those plaudits raises questions about its operations and remedy of distributors — and why Andreessen Horowitz would throw extra money at a founder who’s accused in one lawsuit of intentional misrepresentation and fraud.
As cofounder and CEO of Mountain Peep, California-basically based totally Health IQ, Shah presided over a firm with mounting money waft problems and debt duties resulting in a complete bunch of layoffs and millions in unpaid invoices on the cease of closing year, in step with lawsuits, interviews and documents bought by Forbes. Higher than a dozen lawsuits narrate Health IQ owes distributors over $17 million blended. One lawsuit alleges that Shah and diverse executives knew Health IQ wasn’t going with a fair to pay its bills — but kept racking them up anyway. A declaration from Health IQ’s most up-to-date CEO opposing a provider’s try and take dangle of some belongings revealed the firm is on the hook for lots better portions, owing not not as much as $75 million in loans pledged in opposition to its existing and future belongings. Health IQ’s lawyers believe denied the allegations in responses they’ve filed to this point within the continuing litigation. Two of the circumstances are scheduled to head to trial in 2024.
Yoo, Larkin and Alex Rampell, who led Andreessen’s investment in Health IQ, did not reply to multiple requests for statement, nor did Sue Hager, the agency’s chief marketing and marketing officer for bio and health. Shah did not reply to emails, calls and texts for statement. In an e-mail, Brett Weiner, a accomplice at PR agency LaunchSquad, wrote that Shah had “stepped back from day-to-day operations at Health IQ in early January and formally resigned as CEO quickly thereafter.”
Andreessen Horowitz accomplice Alex Rampell led the agency’s investment in Health IQ.
Ethan Pines for forbes
Health IQ cofounder and most up-to-date CEO Gaurav Suri, who took over when Shah left, replied by skill of an e-mail despatched by Lee Pacchia, a managing director at communications agency ICR. In an announcement, Pacchia acknowledged that Health IQ “faces a not easy financial challenge” and changed into “working diligently to originate a course ahead.” As for the lawsuits, Pacchia acknowledged the firm changed into “unable to statement on the negate allegations, diverse than to show that the firm vigorously disputes them.”
The distributors who claim they’re owed millions of dollars – some of them puny industry owners – stammer it changed into infuriating to see Shah stroll faraway from Health IQ and raise extra mission capital. Dave Maman, the CEO of North Carolina-basically based totally WeCall, urged Forbes that Health IQ owes his 16-particular person firm some $2 million in unpaid invoices. He’s filed swimsuit in California to opt up it back but he says the response from Health IQ’s lawyers to this point has been to snort the claims without a reason of why he hasn’t been paid: “We got steamrolled by Silicon Valley pros.”
In 2013, Shah cofounded Health IQ as a lifestyles insurance protection dealer, promoting plans to “health aware folks.” The thought changed into that participants that were runners or vegetarians needs with a fair to expose decrease lifestyles insurance protection rates. “They’re addressing a basic unfairness of underwriting,” Rampell urged Forbesin 2017. “Why is it that participants that work out maniacally, appreciate well and believe decrease most cancers rates are paying the same rates as folks that manufacture not?”
By 2019, Health IQ had raised almost $140 million in mission funding from companies in conjunction with Greenspring Pals and Aquiline Technology Enhance, bringing its valuation to round $450 million, in step with The Wall Aspect toll road Journal. That very same year, the firm began to shift to a rising and doubtlessly extra lucrative insurance protection market: Medicare Attend. Those are medical health insurance protection plans the place apart non-public companies administer the federal government-funded medical health insurance protection for seniors frail 65 and over.
Medicare blueprint sales are a seasonal industry that is make-or-spoil for brokers at some stage within the annual open enrollment length from October 15 to December 7, when seniors opt their plans. Brokers love Health IQ count on a network of distributors is known as lead turbines, who identify seniors who will be attracted to signing up for a brand new blueprint and opt up their contact info. Once they’ve got a most likely buyer’s cell phone quantity, the lead turbines send the details — and an invoice — alongside to Health IQ.
The lead is handed to a name heart and protection power of sales agents. And for each and every blueprint Health IQ sold, the firm anticipated extra than $1,300 in price earnings, in step with estimates reviewed by Forbes, which might per chance once in some time be paid out over the course of three years.
Interviews with six earlier distributors – in conjunction with loads of who haven’t filed lawsuits – picture Health IQ workers pushing them for increasingly calls at some stage within the open enrollment length in 2022, racking up millions of dollars in invoices. “We were obeying their orders to send as many leads with a deceptive influence that they’d pay on story of of the size of their firm,” says Peter Day, the CEO of Recent Hampshire-basically based totally Optimize to Convert, which has 20 workers. On the closing day of open enrollment, he got a text at 11:44pm from a Health IQ employee inquiring for added leads, in step with a screenshot. Day says he’s now owed $335,850 and has despatched the bill to a collections agency.
“I’ve been within the alternate over 15 years, this has by no device came about to me.”
In complete, Forbes identified 15 lawsuits filed by distributors, which also included companies that equipped name heart enhance products and services and contract workers. The alleged unpaid balances within the lawsuits vary from $29,000 to almost $7 million and blended complete extra than $17 million. When the distributors sought to accept, all claim Health IQ did not pay. In lawsuits the place apart Health IQ’s lawyers believe filed solutions to the complaints to this point, the response has been a same earlier denial of all allegations. Two lawsuits in California Superior Court — one in San Diego County and one more in Los Angeles County — are scheduled to head to trial in 2024.
Whereas the circumstances wind their device during the court system, distributors stammer Health IQ’s failure to pay its bills triggered big disruptions to their agencies. “We weren’t even certain if we were going to make it,” says Maman of WeCall. He says there were times he didn’t device a paycheck to make certain all of his workers were paid. One more CEO, who requested anonymity resulting from pending litigation, says Health IQ’s unpaid bills straight affected workers’ compensation. “All our year-cease bonuses went out the window,” the CEO acknowledged.
Some distributors stammer they’ve applied changes on story of the journey, in conjunction with new limits on how worthy possibilities can bill sooner than requiring payment. Andre Humber, CEO of Innovation Advise Community, which has 11 workers, says Health IQ owes his firm $81,700. He took out an insurance protection protection to duvet accounts receivable so he can recoup the losses within the match a buyer fails to pay tens of hundreds of dollars all once more. “I’ve been within the alternate over 15 years, this has by no device came about to me,” he says.
An amended criticism filed by Quote Velocity in California Superior Court in Santa Clara County on Would possibly maybe per chance 1 alleges Health IQ owes almost $7 million, and accuses the firm of intentional misrepresentation and fraud. Shah, Suri and Vishal Parikh, who’s also a cofounder of Health IQ and Hippocratic AI, are listed as defendants. The criticism alleges that at some stage in a gathering of Health IQ executives in tiring November 2022, Shah acknowledged Health IQ must buy as many leads as most likely from distributors “on story of Health IQ would ‘not be right here’ by the purpose invoices were due anyway or, at a minimal, would not be paying any of its distributors,” in step with the criticism. The phrase “not be right here” is attributed to Shah, whereas the remainder of the sentence is paraphrased. Quote Velocity’s CEO Manny Zuccarelli declined to statement. Shah, Suri and Parikh did not reply to requests for statement about the allegations. They’ve not yet filed an acknowledge to the amended criticism in court, in step with the docket.
In 2022, Health IQ started marketing what it known as “Precision Medicare.” The firm requested seniors to authorize access to seven years of their health file info and, in replace, claimed its artificial intelligence tool would “forecast” their health needs and search through 3,000 Medicare Attend plans to receive the “most nice looking fit” for them, in step with archived variations of the web sites.
However even the algorithms might per chance not attach the firm from a mounting money crunch on the cease of 2022, in step with an e-mail Shah despatched to merchants bought by Forbes. Health IQ changed into projecting extra than $120 million in earnings on paper but would procure vastly much less money resulting from a quirk within the accounting guidelines round how brokers acknowledge earnings. Health IQ changed into recording the beefy price within the first year for each and every protection, even supposing the amount is paid out over a 3 year length – and most nice looking if the buyer doesn’t resolve to alter their health blueprint. That mismatch between earnings and money waft supposed Health IQ had to take dangle of on increasing portions of debt in define to pay its bills, in step with the e-mail. The firm had $150 million in complete debt, in conjunction with mission debt and loans pledged in opposition to its accounts receivable. “I’m very sorry that I misplaced your money,” Shah wrote within the e-mail, “and for that you just’ve got my deepest apologies.”
After the frenzied open enrollment length in 2022, which ended on December 7, Health IQ instructed workers and contractors of layoffs the following day, in step with documents reviewed by Forbes. One class circulate lawsuit filed by a earlier employee alleged between 700 and 1,000 workers were terminated, whereas one more lawsuit claimed extra than 500 layoffs. (Each lawsuits were stayed pending arbitration, for the rationale that workers’ contracts had provisions requiring they enter into arbitration.) Innovative Employee Solutions, a firm that processed payroll for Health IQ contractors, claims it’s a ways owed $3.7 million in a lawsuit. Sara Jensen, senior vp of snort and arrangement at Innovative Employee Solutions declined to statement. Shah and Suri did not reply to requests for statement about what number of workers and contractors were laid off.
In January 2023, Shah and Health IQ cofounder Alex Miller, started working as cofounders at Hippocratic AI, in step with their LinkedIn profiles. One more Health IQ cofounder Vishal Parikh and earlier Health IQ vp Kim Parikh joined as Hippocratic AI cofounders in March, in step with their LinkedIn profiles. In Would possibly maybe per chance, Hippocratic AI launched out of stealth with backing from Andreessen Horowitz and Total Catalyst. Miller, Vishal Parikh and Kim Parikh did not reply to requests for statement.
“I’m very sorry that I misplaced your money, and for that you just’ve got my deepest apologies.”
In a weblog post saying their investment in Hippocratic AI, Total Catalyst CEO and managing director Hemant Taneja and accomplice Alexandre Momeni described Shah as “a accomplice who known belief as the running forex within the alternate.” The pair and the agency’s vp of marketing and marketing and communications Sue Kwon did not reply to requests for statement about whether Shah had disclosed the concerns at Health IQ and within the occasion that they restful deem about him true.
With Hippocratic AI, Shah and cofounders are seizing on the hype triggered by the viral chatbot ChatGPT and its underlying AI engine, is known as a spacious language mannequin. The startup is constructing a mannequin that might energy chatbots that can generate solutions tied to explicit healthcare roles, love a dietician, genetics counselor or medical health insurance protection billing specialist.
Immense language objects are trained on big portions of information. Shah had declined to statement on the negate datasets Hippocratic AI changed into trained on when Forbes requested him in Would possibly maybe per chance. In accordance to questions, PR agency LaunchSquad acknowledged that no info from Health IQ had been mild for any fair at Hippocratic AI, nor had Health IQ or any of its associates sold or licensed any belongings to Hippocratic AI.
With extra than $75 million in well-known loans pledged in opposition to “existing and future-got belongings” – $25 million to Silicon Valley Bank and $50 million to TriplePoint Capital – it appears to be like a sale is in Health IQ’s future, in step with a declaration by Suri filed in a lawsuit in California opposing a provider’s try and take a look at and take dangle of some of Health IQ’s belongings. On April 24, Suri acknowledged Health IQ changed into “within the arrangement of negotiating (with the enhance of its lenders) a sale of certain belongings to a third occasion.”
Emily Baker-White contributed reporting. Sue Radlauer contributed analysis.
