Molina Healthcare, the managed care company that runs government-sponsored health plans in dozens of states, is currently defending a securities fraud class action filed in October 2025 over its handling of rising medical costs. That case sits on top of a resolved $7.5 million investor settlement from 2020, a $40 million Texas Medicaid fraud settlement in 2025, a $4.6 million Massachusetts False Claims Act deal, a defeated ERISA retirement plan suit, and a long line of state insurance fines. The most consequential Molina Healthcare lawsuit right now is the securities case; the rest of this article walks through where each matter stands.
The 2025 Securities Fraud Class Action
On October 3, 2025, investor Jeffrey Hindlemann filed a proposed class action against Molina, CEO Joseph Zubretsky, and CFO Mark Keim in the U.S. District Court for the Central District of California.1Bloomberg Law. Molina Healthcare Investor Sues Over Undisclosed Obamacare Costs The complaint, Hindlemann v. Molina Healthcare, Inc., et al. (Case No. 2:25-cv-09461), alleges the company misled the market by concealing that medical costs were running ahead of the premiums it was collecting, making its optimistic earnings forecasts false.2Becker’s Payer. Molina Sued by Investor Over Undisclosed Care Costs
The class period runs from February 5, 2025, when Molina projected at least $24.50 in adjusted earnings per share and roughly $42 billion in premium revenue, through July 23, 2025, when it sharply revised those numbers down.3Kessler Topaz Meltzer & Check, LLP. Molina Healthcare, Inc. Securities Fraud Class Action According to the complaint, Molina reaffirmed a 13–15% long-term earnings growth target as late as April 2025 even though behavioral health, pharmacy, and inpatient and outpatient utilization were already accelerating.4Levi & Korsinsky, LLP. Molina Healthcare, Inc. Securities Class Action Update
The July 2025 Disclosures and Stock Drop
The disclosures came in two waves. On July 7, 2025, Molina acknowledged “medical cost pressures in all three lines of business” and cut adjusted earnings guidance by roughly 10% at the midpoint, to $21.50–$22.50 per share.5Nasdaq. MOH Investor Alert: Molina Healthcare, Inc. Investors Substantial Losses On July 23, second-quarter results showed GAAP net income of $4.75 per diluted share, down 8% year-over-year, and Molina slashed full-year guidance again to at least $19.00 per diluted share, a 13.6% cut to the midpoint of earlier guidance. Full-year GAAP net income was reduced by 27% to $912 million.6Robbins LLP. Molina Healthcare, Inc. The company blamed a “challenging medical cost trend environment.”3Kessler Topaz Meltzer & Check, LLP. Molina Healthcare, Inc. Securities Fraud Class Action
The next day, Molina’s stock fell $32.03, or nearly 17%, closing at $158.22.6Robbins LLP. Molina Healthcare, Inc.
Where the Case Stands
The case is before Judge Sherilyn Peace Garnett. The lead plaintiff filed an amended complaint on March 31, 2026, and Molina, Zubretsky, and Keim moved to dismiss on June 5, 2026, with a hearing set for September 2, 2026.3Kessler Topaz Meltzer & Check, LLP. Molina Healthcare, Inc. Securities Fraud Class Action7PACER Monitor. Jeffrey Hindlemann v. Molina Healthcare, Inc. et al The litigation is pending.
A related shareholder derivative suit, Taylor v. Wolf et al. (Docket No. 2:25-cv-11769), was filed in the same court on December 12, 2025, alleging that Molina’s officers and directors breached their fiduciary duties by concealing the cost pressures before the guidance cuts.8Bloomberg Law. Molina Executives, Board Sued Over Role in July Stock Price Dips
The 2020 Securities Settlement
Molina paid $7.5 million to resolve an earlier securities class action, Steamfitters Local 449 Pension Plan v. Molina Healthcare, Inc., filed in 2018 in the Central District of California (Case No. 2:18-cv-03579). Investors alleged violations of Sections 10(b) and 20(a) of the Exchange Act over a class period from October 31, 2014 to August 2, 2017, claiming Molina had promoted a “scalable administrative infrastructure” that executives knew could not handle the company’s rapid Medicaid and ACA exchange expansion.9Labaton Keller Sucharow LLP. Steamfitters Local 449 Pension Plan v. Molina Healthcare, Inc.10Bloomberg Law. Molina Healthcare OKd for $7.5 Million Securities Settlement
A federal judge approved the settlement on October 26, 2020. Class counsel received $1.9 million in fees, and the claims administrator made its initial distribution to eligible claimants on April 19, 2024.11Molina Healthcare Securities Settlement. Steamfitters Local 449 Pension Plan v. Molina Healthcare, Inc. Settlement
The $40 Million Texas Medicaid Fraud Settlement
On March 7, 2025, Texas Attorney General Ken Paxton announced a $40 million settlement resolving Medicaid fraud allegations against Molina tied to STAR+PLUS, the state’s managed care program for Texans who are disabled, blind, or aged 65 and older.12Texas Attorney General. Attorney General Ken Paxton Secures $40 Million for Texas Following Medicaid Fraud Investigation of Molina
The state alleged Molina failed to give Medicaid beneficiaries timely assessments for services they were entitled to and then hid its noncompliance from Texas regulators. The case began as a whistleblower action under the qui tam provisions of the Texas Health Care Program Fraud Prevention Act. Publicly available records do not name the whistleblower or indicate whether Molina admitted wrongdoing.
The Massachusetts False Claims Act Settlement
In June 2022, Molina and its former subsidiary Pathways of Massachusetts agreed to pay $4.625 million to resolve allegations that they billed MassHealth for mental health services between November 2015 and March 2018 while failing to properly license and supervise clinical staff, including social workers and psychological associates.13U.S. Attorney’s Office, District of Massachusetts. Molina Healthcare Agrees to Pay Over $4.5 Million to Resolve Allegations of False Claims Act The case originated as a whistleblower suit brought by four former Pathways employees. Pathways had already wound down its Massachusetts operations by the time of settlement.14Massachusetts Executive Office of Health and Human Services. Outpatient Mental Health Company Will Pay $4.6 Million to Resolve False Claims Allegations
ERISA Retirement Plan Case (Molina Won)
Former Molina employees who participated in the Molina Salary Savings Plan sued the company in Mills v. Molina Healthcare, Inc. (Case No. 2:22-cv-01813), alleging that fiduciaries breached their ERISA duties by using “untested, inferior, and expensive” proprietary target-date funds managed by flexPATH Strategies, LLC. Their expert put plan losses between $9.4 million and $26.7 million, and the case cleared summary judgment in September 2023.15FindLaw. Mills v. Molina Healthcare, Inc.
Molina won at trial. After a six-day bench trial in November 2023, Judge Stanley Blumenfeld Jr. dismissed the claims with prejudice on March 21, 2024, finding that the flexPATH target-date funds actually “performed better than comparable investments” and that the plaintiffs had “failed to prove losses.”16PlanAdviser. Judge Rules in Molina flexPATH ERISA Case
State Regulatory Penalties
Regulators have fined Molina repeatedly for how it treats members and providers, with California’s Department of Managed Health Care as the most active.
California
A 2018 DMHC action imposed $217,500 in fines after regulators identified 44 violations in Molina’s handling of member grievances, including 13 complaints not adequately investigated or resolved. A separate $100,000 fine earlier that year involved Molina’s failure to help an enrollee with an emergency room claim and its inaction on illegal balance billing complaints. In 2015, DMHC imposed a $500,000 fine after a non-routine survey found problems with utilization review and appeals, half of which was stayed pending corrective action.17California Health Report. Molina Healthcare Slapped With Large Fine for Lapses in Handling Grievances
The grievance-handling problems persisted. DMHC actions in May and October 2025 added $45,000 and $30,000 in fines for continued failures to resolve grievances within 30 days and to maintain compliant grievance systems, with additional 2022–2024 penalties covering provider claims processing failures such as incorrect denials and late payments.18California DMHC Enforcement Actions. Enforcement Action Listing: Molina Healthcare of California
Texas and Washington
Texas insurance regulators imposed $1.3 million in penalties across three actions between 2016 and 2021. A 2020 audit by the Texas HHS Office of Inspector General also found that Molina’s fraud investigation unit missed compliance requirements around timely preliminary investigations and reporting of suspected fraud referrals. Molina agreed to corrective measures.19Texas HHS Office of Inspector General. Audit of Medicaid and CHIP MCO Special Investigative Units: Molina Healthcare of Texas
Washington’s insurance commissioner fined Molina $100,000 for systemic enrollment and billing errors, including incorrect invoices sent to nearly 2,000 people and wrongful coverage terminations for dozens of members after a systems transition drove a spike in consumer complaints.20Becker’s Payer. Washington Fines Molina Healthcare for Enrollment, Billing Errors
The 2017 Patient Portal Data Exposure
In April 2017, a security researcher found that Molina’s online patient portal exposed medical claims to anyone who changed a single number in the page’s URL, with no login required. The records included names, addresses, dates of birth, medical procedure codes, and prescribed medications; Social Security numbers were reportedly not included.21KrebsOnSecurity. MolinaHealthcare.com Exposed Patient Records At the time, Molina served about 4.8 million people across 12 states and Puerto Rico, and the flaw potentially reached all of their medical claim records.22HIPAA Journal. Molina Healthcare Patient Portal Discovered to Have Exposed Patient Data
Molina took the portal offline, brought in cybersecurity firm Mandiant, and said the issue was fixed by late May 2017. The available research does not show whether the incident led to any HIPAA enforcement action, HHS fine, or patient class action.21KrebsOnSecurity. MolinaHealthcare.com Exposed Patient Records