A Delaware judge rejected Centurion Equity's bid to reopen briefing in its reinsurance and indemnification dispute with Centene over correctional healthcare malpractice tail coverage.
In a May 12, 2026 letter ruling, the Court of Chancery refused Centurion's request to file supplemental briefing on Centene's pending motion for partial judgment on the pleadings. The judge said Centurion was trying to relitigate ground it had already covered – now that it had hired new lawyers.
The case is rooted in a familiar insurance problem: who pays for claims that surface after a deal closes. Centene sold its correctional healthcare subsidiary, MHM Services, to Centurion. Before the sale, Centene insured MHM for medical malpractice through Health Net Life Reinsurance Company, a wholly-owned indirect Centene subsidiary the court calls HealthNet. According to the ruling, HealthNet provided that coverage through reinsurance arrangements, agreeing to indemnify commercial insurers for liabilities they took on under the policies and for costs above the retention amounts on covered medical malpractice claims.
The court described MHM as a correctional healthcare business that draws heavy volumes of medical malpractice suits. HealthNet is still paying fees and costs on post-closing claims tied to pre-closing MHM conduct.
The real fight is whether Centene can push those costs back onto Centurion under the Stock Purchase Agreement. Centene filed first on June 3, 2025. Centurion filed its own action on July 10, 2025. The court coordinated the cases on August 17, 2025, and Centene moved for partial judgment on the pleadings the next day.
Oral argument came on February 12, 2026 and ran nearly 90 minutes. The court said both sides got as much time as they wanted.
Then the bench changed. On March 20, 2026, Cole Schotz withdrew and Richards, Layton & Finger, P.A. came in for Centurion. Hirsch & Westheimer later withdrew as well. Four days after the substitution, Centurion asked for another round of briefing.
Centurion told the court it had fresh arguments not raised before, leaned on Delaware's preference for resolving cases on the merits, and said Centene would not be prejudiced.
The new arguments all sat on the reinsurance side. First, that Centene's reading of SPA Section 8.2 ignored the commercial and accounting realities of captive reinsurance. Second, that under SPA Section 8.5, any indemnifiable losses had to be offset by $17 million in pre-paid premiums MHM paid to HealthNet. Third, that Centene was wrong to lean on Section 5.6 to argue HealthNet's reinsurance obligations had been cut off – Centurion's position is that Section 5.6 only stopped MHM from filing new claims under policies maintained by Centene or its Affiliates, not policies maintained by MHM itself, and did not erase already-accrued reinsurance liabilities.
Judge Meghan A. Adams was not buying it. The ruling says Centurion had already walked the court through how captive insurance arrangements work and how pre-paid insurance hits the books, both in briefing and at oral argument. Centurion had also covered Section 8.5 and how indemnification claims get offset, and had addressed Section 5.6 at length. Centurion had even submitted financial statements showing the accounting impact of the pre-paid insurance under the reinsurance arrangement at issue.
The judge wrote that Centurion was not trying to bring new arguments forward but was looking to clarify or relitigate ones already adequately addressed by both sides.
On the policy argument, she was blunt. Delaware's preference for resolving cases on the merits, she said, is not a reset button or a safety net. The court said it could only read Centurion's request as a do-over after the change of counsel.
The no-prejudice point also fell flat. The court pointed out Centurion had already filed its own complaint, an answer to Centene's complaint, an answer to Centene's motion for partial judgment on the pleadings, and had oral argument time. Forcing Centene to spend more on arguments it had already answered would itself be prejudicial.
The motion was denied. Centene's motion for partial judgment on the pleadings – the ruling that will actually decide who carries the trailing malpractice tab – remains pending.
