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`IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
`HUMANA INC.,
`Plaintif
`f,
`v.
`CHENMED LLC, CHENCO
`HOLDINGS, LLC, PRIMARY
`MANAGEMENT RESOURCES,
`INC., CHEN MEDICAL
`ASSOCIATES P.A., CHEN TECH
`LLC d/b/a/ CURITY, CHRISTOPHER
`CHEN, MICHAEL REDMOND,
`GORDON CHEN, and JEFFREY
`KANG,
`Defendants,
`and
`PMR U.S. HOLDINGS, LLC d/b/a
`JENCARE SENIOR MEDICAL
`CENTER,
`Nominal Defendant.
`C.A. No. 2025-1276-PAF
`PUBLIC VERSION
`E-FILED: November 7, 2025
`VERIFIED COMPLAINT
`1. This is an action for breach of contract and breach of fiduciary duty
`against the family-owned ChenMed group of companies (collectively, “ChenMed”)
`concerning its actions related to JenCare Senior Medical Center (“JenCare”), its joint
`venture with p laintiff Humana Inc. (“ Humana”). JenCare is the trade name of
`EFiled: Nov 07 2025 04:15PM EST
`Transaction ID 77608101
`Case No. 2025-1276-PAF
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`nominal defendant PMR U.S. Holdings, LLC. About a year ago, ChenMed
`unilaterally decided to impose improper technology license fees on JenCare to make
`money at Humana’s expense. Absent Court intervention, ChenMed will have taken
` from JenCare by the end of 2025. What is m ore, ChenMed is
`using the fees to siphon off substantially all the profits from JenCare in order to keep
`100% of those monies for itself.
`2. This is classic self -deali ng, with notably large amounts involved.
`ChenMed owns of JenCare, while Humana owns the other .
`In the last
`year,
` breaking from over eight years of prior practice, ChenMed started imposing
` fee
`s on JenCare . The fees allow ChenMed to collect over
`a mo
`nth, thus depleting JenCare’s cash – which wou ld otherwise be
`distributed periodically to both owners, including Humana – and effectively using
`Humana’s money to shore up ChenMed’s own finances. And aside from the cash
`implications, by reducing JenCare’s profitability, this maneuver also artificially
`depresses the results of operations that Humana, a public company, incorporates into
`its own financial reports to its stockholders for its in the JenCare
`venture.
`3. These pur
`ported license fees, which are prohibited by multiple
`provisions in several governing documents, amount to an abuse of ChenMed’s
`control over JenCare’s day to day operations and its board of directors for
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`ChenMed’s own benefit. Humana’s repeated efforts to get explanations and market
`benchmarks from ChenMed to justify the fees ChenMed said it wanted to charge
`were consistently met with delay and a lack of transparency. The license fees and
`other terms were imposed by ChenMed without any review or approval by the
`JenCare board – again, contrary to express requirements in multiple governing
`documents. Indeed, Humana’s directors on the JenCare board were not even
`provided a copy of the purported license agreement, despite multiple requests, until
`nine months after the fact, by which time had already been
`charg
`ed.
`4. What is more , a si mple review of the unilaterally imposed license
`agreement shows that it does not reflect terms typically found in an arm’s- length
`transaction. Signed by ChenMed CEO Christopher Chen on behalf of both
`ChenMed and JenCare, without the involvement of co -owner Humana, the
`agreement not only impose s fees for intellectual property rights that were already
`licensed to JenCare on a , but als
`o introduces new license
`fees
`to be set at ChenMed’s — even the lower
`end of which exceeds prevailing market rates — or through an alternative pricing
`model of ChenMed’s choice that remains undefined, along with annual increases.
`Furthermore, ChenMed claims the unilateral right to terminate the license on 30 days
`notice, which could severely disrupt JenCare’s business operations,
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`5. Ever
`ything about this arrangement — including its timing, the
`imbalanced terms, and C henMed’s repeated lack of transparency — demonstrate
`that it was not adopted in good faith. Additionally, the arrangement conflicts with
`several negotiated contractual protections that Humana secured over the years in its
`agreements with ChenMed relating to JenCare’s operations.
`6. Accordingly, Humana brings this action both derivatively, on behalf of
`JenCare, and in its own right, to invalidate the new license agreement and to require
`ChenMed to reimburse JenCare for all the amounts ChenMed charged the company
`– over in 2024 alone, and expected to mount to or more by
`the end of 2025 – or in the alternative, to pay Humana compensatory damages for
`the share of the improper costs that Humana was forced to shoulder.
`JURISDICTION AND VENUE
`7. This Court has subject matter jurisdiction under 10 Del. C. section 341
`because Humana seeks relief for claims that are equitable in nature.
`8. Defendants ChenCo Holdings, LLC (formerly known as PMR Virginia
`LLC), Primary Management Resources, Inc. (“PMR”) and Chen Medical Associates
`P.A. are subject to this Court’s personal jurisdiction because they agreed u nder
`Article XIII of JenCare ’s L imited Liability Company Agreement (“LLC
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`Agreement”) and under Section 7.7 of the Long Term Expansion Agreement for
`JenCare that all disputes arising out of or relating to those agreements or JenCare or
`its operations should be adjudicated solely in the Delaware courts, and each party
`consented to the jurisdiction and venue of this Court and waived any objections to
`venue or based on any supposed inconvenience of the forum.
`9. Defendant ChenMed LLC is a Delaware entity and thus subject to the
`jurisdiction of the Court.
`10. Defendant ChenTech LLC d/b/a Curity (“Curity), a nonresident entity,
`is subject to personal jurisdiction in Delaware under 10 Del. C. section 3104 because
`it transacted business with a Delaware entity, derives substantial revenue from
`providing services to a Delaware entity, and engaged in tortious c onduct causing
`injury to a Delaware entity. It is also an alter ego of ChenMed LLC and acted at the
`direction of ChenMed LLC and to serve ChenMed LLC’s illicit corporate objectives.
`11. The individual defendants all serve as directors and/or officers of one
`or more Delaware entities and this action relates to their service in those roles.
`PARTIES
`12. Plaintiff Humana is a Delaware corporation whose principal place of
`business is in Louisville, Kentucky, and whose shares are publicly traded on the New
`York Stock Exchange . It is one of the nation’s largest providers of healthcare
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`services, and serves millions of members through its benefit plans and direct patient
`care businesses.
`13. Humana holds a i nte
`rest in JenCare and has the right to appoint
`three of the seven members of JenCare’s Board of Directors.
`14. Defenda
`nt ChenMed, LLC is a Delaware limited liability company with
`its principal business located in Florida. It is the parent organization of a host of
`companies, all owned and controlled by the Chen family (and collectively known as
`“ChenMed”), that provide a variety of medical and ancillary services.
`15. Defendant ChenCo Holdings, LLC, f/k/a PMR Virginia, LLC, is a
`Virginia
` limited liability company with its principal place of business in Florida. It
`is a ChenMed subsidiary and is the vehicle through which ChenMed invested in
`JenCare. ChenCo Hol
`dings holds a interest in JenCare and has the right to
`appoint four of the seven members of JenCare’s Board of Directors.
`16. Defendant PMR, another ChenMed subsidiary, is a Florida corporation
`with its principal place of business located in Florida. It is one of the ChenMed
`entities that is a party to the Long Term Expansion Agreement dated August 7, 2012
`(as amended) between ChenMed and Humana with respect to JenCare (the
`“LTEA”). It is also one of two “Licensors” under the August 7, 2012 License
`Agreement between ChenMed and JenCare that was an integral part of the 2012
`LTEA arrangements (the “2012 License Agreement”).
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`17. Defendant Chen Medical Associates, P.A. is a Florida professional
`association, part of the ChenMed family of companies, with its principal place of
`business located in Florida. It is also a signatory to the LTEA for JenCare , and is
`the second “Licensor” under the 2012 License Agreement.
`18. Defendant Chen Tech LLC , d/b/a/ Curity is a Florida limited liability
`company with its principal place of business located in Florida. Curity, also wholly
`owned and controlled by ChenMed, is the latest entity through which ChenMed
`wants to license technology and intellectual property to JenCare and is party to a
`new May 1, 2024 Technology and IP License Agreement with JenCare (the “2024
`License Agreement”) that ChenMed is using to siphon millions of dollars out of the
`company.
`19. Defendant Christopher Chen has served as ChenMed’s Chief Executive
`Officer since 2009, and also serves as the CEO and a director of JenCare. He signed
`all the relevant agreements on behalf of ChenMed.
`20. Defendant Gordon Chen is a member of the Chen family that owns
`ChenMed, and is the brother of Christopher Chen. ChenMed was founded by their
`father. Gordon Chen is a director of JenCare, has been a director of ChenMed since
`2011, and served as ChenMed’s Chief Medical Officer from 2015 to 2023. His wife
`and his mother also serve as ChenMed directors.
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`21. Defendant Michael Redmond is a director of JenCare and also serves
`as Chief Financial Officer of ChenMed , where he reports to Christopher Chen and
`to a ChenMed board of directors comprised entirely of the Chen family. He makes
`his living through his relationship with the Chen family and their businesses, and is
`aligned with their interests in all relevant respects.
`22. Defendant Jeffrey Kang is a director of JenCare and previously served
`as the President of ChenMed from November 2015 to January 2018. He is a trusted
`advisor to the Chen family who was appointed by the Chen family to the ChenMed
`board in January 2018, when he transitioned from his operating role at the company.
`For the last 10 years, a substantial portion of his personal finances and professional
`standing have been based on his relationship with the Chen family. He is aligned
`with their interests in all relevant respects. Notably, in his many years on the JenCare
`board, he has rarely spoken against, much less voted against, anything ChenMed or
`the Chen family wanted to do.
`FACTUAL BACKGROUND
`A. Humana and ChenMed Form the JenCare Joint Venture
`and Enter into the LLC Agreement
`23. In 2011, Humana and ChenMed, which had some prior commercial
`arrangements together, strengthened their relationship thr ough the formation of
`JenCare, which offers a range of primary and specialty care services to Medicare -
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`eligible seniors. JenCare started by providing services in Virginia but the parties
`opted to expand its business.
`24. In August 2012, ChenMed and Humana therefore entered into a n
`original LLC Agreement for JenCare, as well as the Long Term Expansion
`Agreement (LTEA) and associated ancillary documents, such as the 2012 License
`Agreement. The LLC Agreement was amended and restated as of December 18,
`2012.
`25. Humana contributed approximately million to JenC are and holds
`of its equity interests. ChenMed holds the other . Humana has three
`of
` JenCare’s seven seats on the boa rd of directors; ChenMed has the other four.
`26. From the outset, it was always the plan that ChenMed would handle
`JenCare’s day to day operations and back office functions. But in view of that
`operational control, as well as ChenMed’s majori
`ty equity interest and its control of
`the board of
` directors, the LLC Agreement contains several contractual limitations
`that protect Humana’s interests.
`27. For exampl
`e, Section 6.2 (d) of the LLC Agreement provides that no
`dividends or distributions may be made without Humana’s consent.
`28. Section 8.2 of the LLC Agreement requires that under most
`circumstances, when distributions are made, they have to be made ratably to
`ChenMed and Humana proportionate to their equity in the business.
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`29. The LLC Agreement also contains protections against self- dealing.
`Section 3.7 of the LLC Agreement provides that transactions between JenCare and
`any entity in which one or more of its Directors, Observers, officers or Members
`have a financial interest (e.g., another ChenMed affiliate) shall be voidable unless
`(a) “the material facts as to the ” related -party nature of the transaction “ were
`disclosed or known to the Board of Directors” of JenCare or (b) “the contract or
`transaction was entered into on terms and conditions that were fair and reasonable
`to [JenCare] as of the time it was authorized, approved or ratified. ” Further, even
`transactions meeting those requirements are voidable if “entered into in bad faith[.]”
`B. The Long Term Expansion Agreement and 2012 License Agreement
`30. In August 2012, Humana and ChenMed also signed the LTEA with
`respect to JenCare. The LTEA laid out rules of the road to govern the planned
`continued expansion of JenCare’s business, and modified the form of practice
`management agreement to be used by the JenCare facilities in the expansion
`markets. It also reflected that as part of the restructuring of the parties’ relationship,
`a prior intellectual property license from ChenMed to JenCare from 2011 would be
`replaced with the new 2012 License Agreement, which was signed concurrently with
`the LTEA.
`31. Under the 2012 License Agreement, ChenMed (through its subsidiaries
`Chen Medical Associates and PMR), “on behalf of themselves and their Affiliates”
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`(i.e., on behalf of the entire ChenMed organization), granted JenCare a
` license to all patents and “Know How”
`owned by th
`e ChenMed organization, as well as a right to all ChenMed
`copyrights and trademarks.
`32. The license was important to the continued running of JenCare’s
`business because ChenMed was in charge of marketing; JenCare was branded as “a
`ChenMed company” and displays the ChenMed corporate logo; and ChenMed
`computer systems are used to operate the Je nCare business. It was thus important
`to Humana – and to safeguarding Humana’s investment in JenCare – that JenCare’s
` right
`to use any intellectual property and technology from ChenMed was
`docume
`nted, and that for those rights could be added later to
`burden Je
`nCare, which is why the license was .
`33. Rei
`nforcing the importance that the li
`cense
`in favor of
` JenCare continue to benefit and protect JenCare into the future, the 2012
`License Agreement also included a clause (section 9) that the license would even
`survive (and not be terminable as an executory contract) in the event of a bankruptcy
`of the ChenMed licensors.
`34. Under secti
`on 2.4 of the LTEA, Humana and ChenMed further agreed
`the 2012 License Agreement would be automatically extended to cover any
`additional territories into which JenCare later expanded its business.
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`C. 2015: Humana and ChenMed Modify the LLCA and LTEA
`35. On April 9, 2015, in anticipation of further expanding the business,
`Humana and ChenMed modified both the LLC Agreement and the LTEA to reflect
`the parties’ agreement for Humana to receive additional equity in JenCare if
`additional capital was needed to fund the expansion.
`36. Specifically, in a Firs t Amendment to the LTEA, an additional Section
`3.7 was added
` to provide that Humana would fund an additional $12.4 million into
`escrow which could be drawn upon at the discretion of the JenCare board if
`JenCare’s own operating cash flows were insufficient to fund the desired expansion.
`However, to the extent the escrow was drawn upon, Hu mana wou ld receive
`additional equity in JenCare pursuant to an agreed formula to compensate it for the
`use of its money.
`37. At that time, ChenMed inquired about the possibility of charging
`JenCa
`re an allocation of ChenMed’s overall IT support and software development
`costs, especially to the extent mi
`ght be incurred in connection with
`JenCar
`e’s expansion. Humana agreed that such charges could be imposed only
`under tightly controlled circumstances, which were embodied in the new Section
`3.7(d) of the 2015 LTEA Amendment:
`a. First, the costs to be allocated could not include
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` patents, trademarks, copyrights and Know- How
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`that were already “license[d] to [JenCare] on a ” under
`the 2012
`License Agreement . Nor would the potential ability to
`allocate some to JenCare “affect the obligation of
`[ChenMe
`d]” to continue to honor that
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`b. Sec
`ond,
` any permissible IT and software development costs allocated
`to JenCare could only be paid out of the Humana -funded escrow, and
`Humana had to receive incremental equity in JenCare, using the
`specified formula, to compensate it for that charge. ChenMed was not
`free to burden JenCare with internal costs that would necessarily affect
`Humana’s economics without compensating Humana in the form of
`additional equity.
`c. Third, ChenMed had to provide Humana with advance written notice
`of any proposed cost allocation and “provid[e] reasonable itemization
`and details of such costs, including reasonable documentation to
`support the fair allocation of such costs across” the ChenMed
`businesses. This was to ensure ChenMed’s transparency in
`demonstrating how it arrived at the proposed charges, and that any
`charges were allocated fairly across all of ChenMed’s businesses and
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`not charged disproportionately to JenCare, the only ChenMed business
`with a joint venture partner that would bear the impact of such a cost.
`d. Fourth, under the new Section 3.7(d), Humana was entitled to an
`increase
` in its “percentage ownership of the membership interest of
`[JenCare]” following the issuance of any such payments, which was
`fundamental to the fact that Humana’s minority o
`wnership was based
`on a joint ve
`nture structure that did not include these IT and software
`development costs.
`38. What is more,
` ChenMed did not have the right just to dictate the costs.
`In addition to being required to provide the detail and the backup information to
`demonstrate that the costs were fair, Humana had a right to object before any cost
`allocation went into effect, and if the parties could not agree, the dispute could be
`taken to arbitration. At no time could ChenMed just pick a number and start taking
`cash out of JenCare.
`39. In parallel with the 2015 amendment to the LTEA, Humana and
`Che
`nMed also amended the LLC Agreement. Some of the amendments concerned
`funding for the contemplated expansion, as well as an amendment of Humana’s
`. B
`ut relevant to this dispute, the parties limited the fiduciary duties that would
`otherw
`ise arise as a matter of law in an LLC and replaced them with specified, but
`analogous, contractual duties.
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`40. Specifically, the 2015 LLC Amendment revised Section 3.5(b) of the
`LLC Agreement to provide that no director or officer shall be liable “for any action
`undertaken or omitted in good faith reliance upon the provisions of this Agreement
`unless the acts or omissions of such Director, Observer, officer, agent, partners,
`employees, counsel or Affiliates of such Director, Observer or officer were not in
`good faith or involved gross negligence or intentional misconduct ” [emphasis
`added].
`41. The 2015 LLCA Amendment also added a new Section 3.5(d) to
`specify that ordinary fiduciary duties are eliminated, “provided that the foregoing
`shall not eliminate the obligation of the Company and each Member to act in
`compliance with the express terms of this Agreement.”
`42. The effect of those two amendments, read together, was to solidify as a
`contractual matter ChenMed’s and the ChenMed-appointed directors’ obligations to
`act in good faith and not to engage in willful misconduct, which corresponds to the
`traditional duty of loyalty under Delaware law, and to preserve both the duty not to
`act in such a prohibited manner and the liability that would ensue from a violation.
`D. ChenMed Shifts Its Expansion Strategy and Attempts to Cut Out
`Humana
`43. Following the execution of the 2015 LTEA Amendment, ChenMed
`shifted its expansion strategy. Instead of continuing to expand operations through
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`JenCare in partnership with Humana (which was the impetus behind the escrow
`arrangement), ChenMed began exploring parallel ventures and entered new markets
`through a new brand of its own, Dedicated Senior Medical Centers.
`44. As a result, additional capital was not required for expansion of
`JenCare, and no funds were ever drawn from the Humana -funded escrow. In large
`part, this shift in strategy appears to have been driven by ChenMed’s desire for no
`additional JenCare equity to be issued to Humana.
`45. Similarly, from 2015 to 2020, no portion of ChenMed’s IT costs were
`ever allocated or proposed to be allocated or charged to JenCare. Consequently, no
`itemization of any proposed costs, nor backup detail supporting any proposed
`allocation, was provided to Humana. It appeared to be a dead issue – again, likely
`because it was the parties ’ original understanding that such costs would not be
`allocated to JenCare , and ChenMed preferred not to permit Humana to secure
`additional equity in JenCare as compensation for such a charge at a time that JenCare
`was generating significant profits.
`46. Not surprisingly after ChenMed pursued growth away from JenCare,
`JenCare’s growth stalled. In February 2020, in an effort to restart growth at JenCare,
`ChenMed and Humana decided to further modify the LTEA to address various
`operational issues in the business. The two parties executed a binding “JenCare
`Expansion Term Sheet” that contemplated further and more detailed documents to
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`implement some of the intended amendments, but that was nonetheless by its terms
`binding when signed (the “2020 Binding Term Sheet”).
`47. The 2020 Bindi ng Term Sheet also directed that the Humana -funded
`escrow account, which had been languishing untouched for years, would be
`eliminated a
`nd the entire previously funded $12.4 million amount, which had never
`been tapped, would be returned to Humana. These amendments were intended to
`address C
`henMed’s desire for Humana not to receive additional equity in JenCare if
`additional capital was required for the business.
`48. Relatedly, the 202
`0 Binding Term Sheet provided that Section 3.7 of
`the LTEA—which had been added by the First Amendment to the LTEA in 2015
`and is the section that allowed for limited IT cost allocations under specified
`circumstances, but only if Humana received compensatory additional equity —
`would be “revised to account for the termination of the Escrow Agreement[.]”
`49. No such contemplated additional amendment documents were ever
`prepared or executed, however, and there was never any other agreement that
`ChenMed could begin charging IT cost allocations to JenCare.
`E. ChenMed Contemplates an IPO of JenCare in 2022 and Further
`Exclude
`s Humana
`50. From 2020 to 20
`22, ChenMed increasingly treated JenCare as another
`Chen family fiefdom, to be operated without regard to its joint venture partner or the
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`governing instruments – particularly as ChenMed’s own business grew and it
`became less reliant on the Humana -payor relationship . In other words, once
`ChenMed received its money and Humana had helped the Chen family kickstart their
`business, Humana was no longer considered in ChenMed’s decisions, despite
`Humana’s status as a joint venture partner.
`51. ChenMed’s self -serving approach and disregard for established
`corporate governance practices became increasingly evident over time.
`52. For example, in 2021, the Chen family was exploring alternatives to
`obtain liqu
`idity for its investment in JenCare. Humana objected to an IPO of
`JenCare
`unless a transaction were structured to protect Humana’s rights post-IPO. ChenMed
`then propose
`d an arrangement for Humana to buy out ChenMed’s interest in a
`transaction that valued JenCare at an outsized price of .
`53. When Humana refused to pay such a n inflated price for ChenMed’s
`equity, ChenMed then pursued a recapitalization transaction that instead would have
`involved partnering with a private equity investor and buying out Humana’s interest
`in JenCare . But this time, its proposed transaction valu ed JenCare at
` – a f
`raction of the number ChenMed itself ascribed to the business just five
`months e
`arlier. The only change was one of perspective – an inflated price if
`ChenMed is a seller, and an artificially depressed price if ChenMed is a buyer.
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`54. When Humana rejected the low-ball proposal, ChenMed went back to
`talking about an IPO – despite Humana’s consistent insistence that any transaction
`had to protect Humana’s rights under the LLC Agreement and LTEA. Then in mid-
`2022, ChenMed started pursuing an IPO for JenCare in earnest – without ever taking
`the matter to the JenCare board of directors. It arranged for JenCare to hire
`investment bankers and lawyers, and was actively preparing for an IPO, all without
`board approval so that it could hide these developments from Humana’s three
`directors on the JenCare board.
`55. When it finally told Humana at the July 2022 board meeting of all these
`activities already in the works, it then produced inaccurate board materials that
`claimed that Humana had known about these plans all along and had supported them
`– which was plainly false.
`56. Humana balked at the misconduct and put ChenMed on written notice
`of its im
`proprieties. Followi
`ng months of additional negotiations, the parties finally
`agreed in January 2023 on a Binding Letter of Intent with respect to a potential
`JenCare IPO (the “2023 IPO Agreement”) . Humana agreed to support an IPO but
`was prote
`cted with new provisions regarding both post-IPO governance rights and
`revised commercial terms and protections for the health care contracts between
`Humana and JenCare.
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`57. In addition, having just seen new examples of attempted self -dealing
`by ChenMed, Humana obtained additional protection for itself by negotiating to
`tighten the standards for related- party transactions under the JenCare LLC
`Agreement.
`58. As part of the 2023 IPO Agreement, ChenMed and Humana agreed to
`modify the LLC Agreement to provide that any related- party transactions between
`JenCare and the ChenMed family of companies “entered into prior to, or in
`connection with any JenCare IPO, shall be on arm’s length terms as determined by
`the Board [of JenCare] acting in good faith.”
`59. This provision tightened the protections for Humana previously
`contained in Section 3.7 of the LLC Agreement, which had required only disclosure
`to the board of the related-party interest and that the contract be “fair and reasonable
`to” JenCare and not be undertaken in bad faith. Under the new provision, ChenMed
`could not just enter a related party contract unilaterally and report it later—it had to
`actually be presented to the Board for approval in advance, and the terms not only
`had to be “fair and reasonable” but also satisfy a more objective requirement that the
`terms be “arm’s length.”
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`F. ChenMed Struggles Financially in 2023 and 2024 and Imposes Its
`Financial Burdens on Humana
`60. Beginning in late 2023, ChenMed began experiencing financial
`difficulties across multiple businesses and, in an intentional effort to improve its own
`finances at Humana’s expense, decided to start imposing a technology license fee on
`JenCare in 2024.
`61. This decision was made unilaterally by ChenMed management, with no
`prior input from—much less approval by—the JenCare board, despite the directive
`in the 2023 IPO Agreement. No explanation was given for how the fee was to be
`calculated, what objective metrics (if any) were to be used, or whether any similar
`charges were assessed against ChenMed’s other businesses. ChenMed sought to
`burden JenCare with a multi-million dollar charge for this IT license fee for 2024,
`which was not even accounted for in the annual company budget.
`62. Humana immediately objected, arguing that the charge was both
`unaut
`horized and violated multiple provisions in the various agreements between
`ChenMed and Humana. And ChenMed certainly could not start charging JenCare a
`fee of any size – much less of the magnitude it sought to impose – for what JenCare
`already had a .
`63. ChenM
`ed initially agreed with Humana to hold the matter in abeyance
`while it discussed other potential business arrangements with Humana, while
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`holding out the position – a demand, not a request – that if it did not come to terms
`with Humana on these other arrangements, it might then go back and reimpose the
`technology license fee retroactive to January 1, 2024.
`64. Ultimately, no other business arrangements were made between
`ChenMed and Humana, and in late 2024, ChenMed again announced that it was
`imposing its technology charge, in willful violation of its agreements with Humana.
`Once again, it provided no detail as to how the amount was calculated, whether it
`was imposed ratably across all ChenMed businesses, or what external benchmarks
`it was relying on to justify the supposed fairness of the pricing.
`65. Nor did ChenMed explain how such a charge was authorized at all,
`since
` the only provision in the prior documents potentially allowing for a charge—
`in the subsequently terminated 2015 LTEA Amendment—required that Humana be
`compensated with additional equity for any such costs. Further, ChenMed was still
`purporting to charge a license fee for IP rights that were already licensed to JenCare
` unde
`r the 2012 License Agreement.
`G. Chen
`Med Executes a Self-Dealing New License Agreement with JenCare
`in 2024
`66. Following months of back and forth on the technology charges,
`ChenMed finally provided Humana in February 2025 with a copy of a technology
`and license agreement purportedly executed in May 2024 between JenCare and Chen
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`23
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`Tech, LLC d/b/a Curity (a ChenMed entity that now purports to own various IP
`rights and/or provide IT services, even though it was different ChenMed entities the
`licensed many of the same rights to JenCare in 2012) (the “2024 License
`Agreement”). The 2024 License Agreement had never been reviewed or approved
`in advance by the JenCare Board, plainly had not been negotiated (since the terms
`are one-sided and off market), and was signed by Christopher Chen on behalf of both
`ChenMed/Curity and JenCare.
`67. ChenMed still provided no meaningful supporting information
`concerning the fairness of terms or the calculation of rates, which were instead
`presented to Humana after the fact and without input.
`68. The only thing ChenMed has pointed to in seeking to justify the size of
`the fee
` is an outdated study it commissioned years ago, containing only unexplained
`conclusory financial metrics, that purports to say that ChenMed could justify
`charging even it i
`s already stripping out – a
`preposterous conclusion since the technology fee alone would then equate to
`of JenCare’s gross margin (total revenue less medical costs), before any operating
`expenses (such as rent, utilities and equipment) are even counted. Those numbers
`are
`so inherently implausible that JenCare would be operating of
`dollar
`s in the red, losing massive amounts of money on every patient it serves.
`ChenMed’s position that it is doing JenCare a favor, and offering a “discount,” by
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`24
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`not charging an even greater fee that would bankrupt the company, is a far cry from
`offering any economically rational financial model built from the ground up to
`explain the basis of the desired charges.
`69. Even when asked, ChenMed has refused to explain to Humana whether,
`or how, it charges its wholly- owned clinics (ChenMed and Dedicated Senior
`Medical Center) for these services. It certainly appears that that ChenMed is
`imposing charges on its joint venture partner using, at best, a non -negotiated, non-
`arm’s-length intracompany pricing model or, potentially, charging JenCare
`exclusively while applying no comparable allocation to its other businesses, despite
`the original understanding that JenCare would be treated consistently in this regard.
`70. The 2024 License Agreement is utterly one-sided and represents classic
`self-dealing, with ChenMed leveraging its position as the controlling equity holder
`in JenCare to secure a financial