"It Should Be Gravy": Miami Magnate John Ruiz Bites Back After Cano Health Drama

When he resigned from the Cano Health board of directors on March 30, Miami Beach billionaire Barry Sternlicht went out with a bang, skewering the company and CEO Marlow Hernandez for burning through cash and poor management, as he saw it.

"I have never witnessed such poor corporate governance at any company, let alone a public company, and I have been involved in at least nine and served as chairman or CEO of six," Sternlicht professed in his resignation letter.

Cano Health runs primary care centers and health services for more than a quarter-million patients, mostly seniors. Sternlicht is one of Cano's biggest shareholders and helped the Miami-based company go public in a $4.4 billion merger in 2021.

Evidently, the wealthy real estate investor and cofounder of Starwood Capital Group was not ecstatic that the company's stock price has since tumbled from roughly $11 a share at the start of August 2021 to $1.34 as of April 3.

In the scathing letter, Sternlicht claimed the company's management missteps were exemplified by transactions with fellow Miami-area billionaire John Ruiz's firm MSP Recovery. It was a pointed yet cryptic jab in the direction of MSP, a company that Cano enlists for medical claims collection.

"The number and nature of related party transactions, together with what I consider poor governance (demonstrated by transactions such as MSP Recovery), is highly concerning to me as it should be to the rest of the Board," Sternlicht wrote.

While Sternlicht's office declined to elaborate on his comments when reached by New Times, Cano's public filings detail an arrangement in which Cano assigns claims to MSP Recovery in exchange for cash or stock. Late last year, Cano also tested out some of MSP's healthcare data tools leading up to MSP's rebranding under its new LifeWallet moniker.

Ruiz tells New Times he's at a loss to explain why his company was targeted in Sternlicht's barrage.

"I guess maybe he doesn't understand probably what we do... It should be gravy to them anyway. Because he was never at a meeting, he doesn't understand how it works. He doesn't understand the value behind it," Ruiz says.

"It really doesn't cost Cano much of anything at all other than engaging us to do some data software, installing LifeWallet systems: an improvement of both the payer and the patients themselves. It's just very weird. I just think he's got a vendetta against somebody."

Ruiz adds Sternlicht's comments were in "poor taste."

"And on top of that, I think that a board member shows a lack of professionalism in conducting himself the way that he did it. [It] becomes quite obvious that there's an agenda behind the manner in which it was done."

MSP specializes in medical claims recovery in situations where a primary insurer like an auto insurer allegedly fails to pay up for the treatment of an injured patient, putting the burden on Medicare, Medicaid, or other health plans.

As of December 2022, MSP Recovery owed Cano roughly $60 million in receivables. The sum was due before the filing of an annual report, and MSP had the option to pay Cano in cash or stock. [Editors note: MSP Recovery AKA LifeWallet announced it was delaying the filing of the annual report, saying it "needs additional time to finalize and analyze the disclosure" in the document. The company has until mid-April to file the report under the late-filing grace period.]

LifeWallet chief communications officer Diana Diaz says the company offered the same services to Cano as it does for other clientele, including analyzing data to identify "every recoverable instance" for medical claims.

"It was our business model... that we offer to all of our clients," Diaz tells New Times. "There was no difference between the Cano purchase and others that we've done for clients. We purchased the recovery rights. In this case, those recovery rights were paid in shares."

MSP rebranded as LifeWallet in December 2022 after a difficult year in which its stock tanked upon going public, in an SPAC merger comparable to Cano's. Within a week of opening trading on the NASDAQ, the Coral Gables-based company lost more than 90 percent of its share value, shedding billions of dollars in market capitalization.

In the bid to rebrand, MSP introduced new patient-centered healthcare products and a blockchain-based tool that it said would help process claims data more efficiently.

The company also touted Ruiz's much-publicized foray into the world of collegiate sports marketing. A top funder of "name, image, and likeness" (NIL) deals for university athletes, Ruiz has enlisted multiple Miami Hurricanes players for endorsement deals with LifeWallet.

Though it had a new name, MSP maintained its core business was still medical claims recovery.

In August 2022, Cano Health announced a partnership with MSP Recovery to implement a test program slated to include facial recognition for patient check-in and tools to ensure the accuracy of patients' medical information. Three months later, MSP (rebranded as LifeWallet) described how its blockchain technology was being tested by Cano as part of a similar pilot program.

Ruiz says he believes the MSP Recovery "transactions" Sternlicht criticized were related to claims assignments, rather than the minutia of the LifeWallet products.

Sternlicht was not the only Cano director to resign last week. As reported by Forbes, Lewis Gold and Elliot Cooperstone also stepped down. In wake of the resignations, Cano's stock price fell below $1. It bounced back to $1.34 on April 4 (higher than it was before the resignation) after Sternlicht, Gold, and Cooperstone announced they would be using their leverage as primary shareholders in Cano to push for the sale of assets and the replacement of CEO Hernandez.

Cano went public in June 2021 through a merger with Sternlicht's special purpose acquisition company (SPAC) JAWS Acquisition Corp.

In his departing letter, Sternlicht said he had initially been "impressed by the personal story, passion, and conviction" of Hernandez and the company's mission, leading him to invest $50 million.

"In total, we handed the company in excess of $1.4 billion in June 2021, less than two years ago," he added. "Fast forward to today, this management team has expended nearly all this cash, and the company has not enjoyed any demonstrable improvement in its core profitability."

In response to Sternlicht's letter, Cano Health called his "method of resignation particularly reckless."

"It is particularly concerning that Mr. Sternlicht decided to share his individual perspective on confidential board deliberations and communications, which is misleading to shareholders and undermines the board's ability to engage in the vigorous exchange of diverse views that is necessary for good governance," the company's statement read.

While the company's stock price has plummeted over the last six months, Cano rebuffed Sternlicht's comments on Hernandez's leadership and management decisions.

"Cano Health has established a strong performance track record — providing patients improved access to care, lowering hospital admissions, and significantly reducing medical costs," the company said.