The ModivCare lawsuit most investors and reporters are tracking is Kalera v. ModivCare, Inc., a securities fraud class action filed in Colorado federal court in January 2025 alleging the company hid deteriorating cash flow in its non-emergency medical transportation business. It is the most prominent of several legal matters facing ModivCare Inc., the Colorado-based Medicaid transportation broker formerly known as The Providence Service Corporation, which also emerged from Chapter 11 bankruptcy in January 2026, is fighting a contempt motion over unpaid legal fees, and recently defended a $750 million Maine state contract before that state’s highest court.
The Securities Fraud Class Action
Investors filed Kalera v. ModivCare, Inc., et al. (Case No. 1:25-cv-00306) on January 29, 2025, in the United States District Court for the District of Colorado.1Stanford Law School Securities Class Action Clearinghouse. ModivCare Inc. Securities Litigation The complaint names ModivCare and three of its officers as defendants and covers a class period running from November 3, 2022, through September 15, 2024.2Kessler Topaz Meltzer & Check, LLP. ModivCare Inc.
According to the complaint, ModivCare made materially false or misleading statements about its financial condition. Specifically, investors allege the company failed to disclose that certain contracts in its non-emergency medical transportation segment were eroding free cash flow, that contract renegotiations and pricing accommodations were quietly cutting into adjusted EBITDA, and that ModivCare lacked sufficient liquidity to sustain operations. The lawsuit says those realities were obscured by upbeat public statements about the business.2Kessler Topaz Meltzer & Check, LLP. ModivCare Inc.
The Stock Drops Cited in the Complaint
The complaint anchors its allegations in three share-price declines it characterizes as partial corrective disclosures. On May 4, 2023, following a report of declining cash flow from operations, shares fell roughly 16% to close at $58.00. On February 23, 2024, after the company reported negative cash flow and a weak outlook for the first half of the year, the stock fell about 39% to $26.62. The largest drop came on September 12, 2024, when news broke that ModivCare planned to raise additional capital; shares fell nearly 59%, closing at $12.76.3GlobeNewsWire. ModivCare Inc. Investors Please Contact the Portnoy Law Firm
Auditor Findings That Support the Allegations
The allegations sit on top of acknowledged internal control problems. In its audit of ModivCare’s 2023 fiscal year, KPMG LLP issued an adverse opinion on the effectiveness of the company’s internal controls over financial reporting. The auditors identified material weaknesses in IT systems and in controls over revenue and payroll processes in the personal care services segment, flagged the company’s failure to establish effective change-management and logical-access controls, and concluded there was a “reasonable possibility” that a material misstatement could go undetected. KPMG still issued an unqualified opinion on the financial statements themselves, meaning the reported numbers were considered accurate despite the control deficiencies.4SEC EDGAR. ModivCare Inc. Form 8-K The company also recognized $183.1 million in goodwill impairment charges for 2023.
Where the Case Stands
Competing motions for the appointment of a lead plaintiff and lead counsel were filed in early 2025.5CourtListener. Kalera v. ModivCare Inc. Levi & Korsinsky LLP was appointed lead counsel in October 2025.6Levi & Korsinsky LLP. Levi & Korsinsky to Serve as Lead Counsel in ModivCare Lawsuit Defendants filed a motion to dismiss the amended complaint on March 10, 2026, and briefing on that motion was still underway as of that date. No ruling has been issued, and the case remains ongoing.2Kessler Topaz Meltzer & Check, LLP. ModivCare Inc.
The Bankruptcy and a Post-Emergence Fee Fight
On August 20, 2025, ModivCare and several subsidiaries filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of Texas (Case No. 25-90309), before Judge Alfredo R. Perez.7SEC. ModivCare Inc. Form 8-K The company reported approximately $1.4 billion in total funded debt and entered the proceeding with a restructuring support agreement already in place with key creditors, aiming to cut roughly $1.1 billion in obligations, or more than 80% of its debt load.8Healthcare Dive. ModivCare Files Bankruptcy
ModivCare attributed the filing to labor cost inflation, declining Medicaid reimbursements, competition from smaller transportation providers, and Medicare Advantage plan redesigns that reduced coverage for supplemental benefits like non-emergency transport. Federal policy changes, including the “One Big Beautiful Bill Act” and automatic spending cuts under the Budget Control Act, added pressure.9Chapter11Cases.com. ModivCare Files for Bankruptcy With Plan to Cut $1.1 Billion in Debt ModivCare emerged from Chapter 11 on January 5, 2026, with total debt reduced by $1.1 billion and $100 million in new capital.10Latham & Watkins. Latham Represents ModivCare in Successfully Completing Restructuring
The restructuring did not close out every dispute. In May 2026, White & Case LLP, which had represented the committee of unsecured creditors during the bankruptcy, filed an emergency motion seeking a contempt ruling against ModivCare. The firm alleged the company failed to comply with an April court order requiring it to deposit $1.64 million into an escrow account for legal fees. Judge Perez said he would hold a hearing to investigate a potential breach of the plan-confirmation order.11Bloomberg Law. White & Case Seeks Contempt Ruling Against ModivCare Over Fees
The Maine MaineCare Contract Litigation
ModivCare has also been at the center of a years-long fight over a 10-year, $750 million contract to provide non-emergency medical transportation for MaineCare, Maine’s Medicaid program. In October 2023, the Maine Department of Health and Human Services selected ModivCare, operating through its subsidiary ModivCare Solutions, LLC (formerly LogistiCare), as the winning bidder for all eight of the state’s transportation regions.12Maine Supreme Judicial Court. Waldo Community Action Partners v. DAFS, 2026 ME 13
Two local non-profit providers, Penquis Community Action Agency and Waldo Community Action Partners, challenged the award. They argued the state’s scoring of proposals was arbitrary and violated competitive bidding statutes. The administrative appeal was rejected in April 2024, the Waldo County Superior Court upheld that decision in January 2025, and on February 10, 2026, the Maine Supreme Judicial Court affirmed the lower court ruling. The court found no evidence that the evaluation panel’s scoring was arbitrary or capricious.12Maine Supreme Judicial Court. Waldo Community Action Partners v. DAFS, 2026 ME 1313Penobscot Bay Pilot. Maine’s Supreme Judicial Law Court Upholds State Bid Award to ModivCare LLC Over Waldo CAP
Political opposition has continued in parallel with the litigation. In January 2026, roughly 130 state legislators from both parties signed a letter to Governor Janet Mills urging the administration to abandon the ModivCare contract and restart the procurement, citing the company’s bankruptcy and warning it posed “serious risks to the state and Maine’s NET infrastructure.” ModivCare said it had provided more than one million trips in Maine with a complaint rate of 0.007%.14Maine Public. Lawmakers Urge the Mills Administration to Drop Embattled MaineCare Transportation Provider
Resolved Cases
False Claims Act Settlement
ModivCare paid $3.75 million to the federal government and the state of Ohio to resolve allegations that it submitted false claims to Medicare and Medicaid over a period spanning more than a decade.15The Maine Monitor. ModivCare Complaints The related federal lawsuit (Case No. 1:15-cv-555, Southern District of Ohio) alleged that a transport provider called Mobile Care engaged in upcoding, billing for higher levels of medical transport than were actually provided, and that ModivCare’s predecessor, LogistiCare, knowingly scheduled medically unnecessary ambulance transports by relying on blanket preapprovals instead of reviewing individual patient files.16GovInfo. United States District Court Southern District of Ohio, Case No. 1:15-cv-555
Worker Classification Class Action
In August 2020, Mohamed Farah, owner of a company called Dalmar Transportation, filed a putative class action in the U.S. District Court for the Western District of Missouri alleging that ModivCare Solutions misclassified its non-emergency transportation providers as independent contractors rather than employees, in violation of the Fair Labor Standards Act and the Missouri Minimum Wage Act. A class was conditionally certified in June 2021, covering all contracted providers who received 1099 payments over the preceding three years. The case was transferred to binding arbitration in January 2023, an arbitrator approved a final settlement on October 30, 2023, and the settlement payment was made in full on December 1, 2023.17SEC EDGAR. ModivCare Inc. 2023 Annual Report – Legal Proceedings