Florida Jury Finds Former WellCare Executives Guilty of Medicaid Fraud

June 27, 2013 — Every year, the U.S. Justice Department relies on the federal False Claims Act to recover millions of tax dollars lost to Medicaid fraud. The qui tam provisions of the anti-fraud statute permit health care workers who discover misreporting and overbilling to Medicaid to file suit against the unethical health care providers. The whistleblowers then keep a percentage of the monies collected by the government. Health care workers, including hospice program employees, are often in the best position to discover fraudulent reporting and overbillings and to notify the government.

Former HMO Executives Caused False Claims to be Filed With Florida Medicaid Program

Four former executives of WellCare Health Plans Inc., a Florida health maintenance organization (HMO), have been found guilty of health care fraud. The former executives are: Todd S. Farha, former Chief Executive Officer; Paul L. Behrens, former Chief Financial Officer; Peter E. Clay, former vice president of medical economics; and William L. Kale, former vice president of Harmony Behavioral Health Inc. — a wholly-owned subsidiary of WellCare.

In several states, WellCare runs HMOs that derive a significant portion of their income from state-funded healthcare programs such as Medicaid. In Florida, WellCare operates Healthease and StayWell, both of which contracted with Florida’s Agency for Health Care Administration (AHCA) to provide beneficiaries of the Florida Medicaid program with a number of health care services, including behavioral health services.

Florida’s Medicaid program can spend millions of dollars each year on premiums for particular behavioral health services provided to beneficiaries. The law changed in Florida in 2002 to require that Florida Medicaid HMOs would spend 80 percent of the premium paid for those services on actually providing the behavioral health services. Under the 2002 law, if an HMO spent less than 80 percent of the amount paid by the state, the HMO was required to refund the difference back to AHCA.

According to the U.S. Justice Department, between 2003 and 2007, the four former WellCare executives were found guilty of concocting a scheme to file false claims to AHCA by including inflated expenditure information in WellCare’s annual reports to the agency. By overstating the two WellCare HMOs’ expenditures on behavioral health services, WellCare was able to reduce the amount of the funds it was required to pay back to AHCA.

In May 2009, the government entered into a deferred prosecution agreement with WellCare on related charges. As part of that agreement, WellCare was forced to pay $40 million in restitution to Florida’s AHCA and to forfeit an additional $40 million to the U.S. government, which helps to fund state Medicaid programs.

Health Care Employees Spot False Claims Act Violations First

False Claims Act violations involving fraudulent reporting or Medicaid overbillings often come to the surface when concerned health care workers notify the government. Tipsters who are brave enough to collaborate with the Justice Department should learn their rights before taking action. The Medicaid fraud lawyers with Waters & Kraus offer whistleblowers the legal counsel they need. Contact us by email or phone our False Claims Act attorneys at 855.784.0268 to learn more about our qui tam practice.

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