Former CMS administrator resigns from Centene board over governance, leadership dispute

Leslie Norwalk resigned this week from Centene Corp.’s board of directors over a disagreement about the governance process and committee leadership.

Her resignation letter was made public by Centene Friday in a filing with the U.S. Securities and Exchange Commission.

Norwalk, former administrator of the Centers for Medicaid and Medicare Services, was appointed to the insurer’s board in January. She is strategic counsel to law firm Epstein Becker Green.

Norwalk did not immediately respond to interview requests.

“The governance process surrounding a recent important decision fell egregiously short of what I and a number of other board members considered appropriate,” Norwalk wrote in her resignation letter, dated April 11.

She wrote that the full board did not receive adequate information in advance of a vote on a “key matter” nor the opportunity to discuss it, which contradicted the board’s standard process. Centene “is best served with board and committee chairs that appreciate the importance of good governance practices,” she wrote.

She ended the letter saying that, after discussions with current leadership, she was “not confident that meaningful changes will be made timely, if at all.”

The letter was addressed to the entire board and specifically to H. James Dallas, acting chair, and Jessica Blume, chair of the board’s nominating and governance committee.

Centene did not immediately respond to an interview request.

In Norwalk’s short time on Centene’s board, she served on the board’s compliance, environmental and social responsibility and government and regulatory affairs committees. She previously served as a board member of Magellan Health, a behavioral health provider Centene acquired for $2.2 billion last year.

On earnings calls, Centene executives have said they are looking to shed non-core pharmacy assets, and there has been speculation that Magellan might be one of those assets. Centene has reserved $1.25 billion to settle allegations that its now-defunct pharmacy benefit management platform overcharged state Medicaid departments for drugs.

In January, Magellan took over management of California’s Medicaid prescription drug program.

Worker shortages frustrated thousands of patients waiting for prior authorization approvals, some of whom were on hold with the company’s call centers for eight hours at a time. State employees stepped in to man the company call centers, although state workers are no longer customer support on behalf of the company. California’s healthcare agency said it withheld $3.8 million–or 64%–of Magellan’s January contract as a penalty.

Norwalk’s departure comes as Centene is making changes to its board, driven in part by the arrival of activist hedge fund Politan Capital Management.

In November, Politan invested $900 million in Centene, with the goal of increasing the insurer’s value by selling certain subsidiaries and overhauling Centene’s leadership and board.

Since then, five independent board members approved by Politan have joined the board and six longtime board members have retired or announced plans to step down.

Politan did not immediately respond to an interview request.

In Friday’s SEC filing, Centene said since November it also has changed the heads of its nominating and governance, audit and compensation committees. The company also has separated the roles of chairman and CEO, appointed a new lead independent director and implemented a mandatory board retirement age.

In March, the insurer promoted Sarah London from its tech and healthcare services lead to CEO. London succeeded longtime CEO Michael Neidorff, who died last week.

In the SEC filing, Centene said the “entire board” supports London.