Kusserow’s Corner: Former Executives of WellCare Found Guilty

In a high-profile case watched closely by the managed care sector, the Department of Justice (DOJ) announced on June 11, 2013 that four former executives of WellCare Health Plans Inc. (WellCare), a health maintenance organization (HMO) operator, were found guilty by a federal jury in Tampa, Florida of various charges, including health care fraud, making false statements relating to health care matters, and making false statements to a law enforcement officer.  The jury returned not guilty verdicts with respect to several counts and was unable to reach a verdict on others. The judge declared a mistrial as to those counts on which the jury was deadlocked. The Justice Department will decide, at a later date, whether to retry the individuals on those charges.

WellCare operates HMOs in several states targeted for government-sponsored health care benefit programs like Medicaid. The case stemmed from a federal grand jury in March 2011 that returned indictments charging WellCare with various federal criminal violations related to a scheme to defraud the Florida Medicaid program, from the summer of 2003 through the fall of 2007, relating to expenditure information for behavioral health care services.

On May 5, 2009, the government filed related charges and a deferred prosecution agreement (DPA) against WellCare, wherein WellCare was required to pay $40 million in restitution, forfeit another $40 million to the United States, and cooperate with the government’s criminal investigation.

The convicted parties were former WellCare Chief Executive Officer Todd S. Farha; former WellCare Chief Financial Officer Paul L. Behrens; and William L. Kale., former vice president of Harmony Behavioral Health Inc., a wholly-owned subsidiary of WellCare.  Peter E. Clay, former WellCare Vice President of Medical Economics, was found guilty of making false statements to a law enforcement officer.  The maximum penalty for each of the health care fraud counts is 10 years in prison. The maximum penalty for all other counts is five years in prison. A sentencing date has not yet been set.

Thaddeus M.S. Bereday, WellCare’s former general counsel, was severed from the trial in February of this year and will be tried separately, at a later date.

Richard P. Kusserow was the DHHS Inspector General for over eleven years.  He is the author of nine books related to compliance.  He is the founder and CEO of Strategic Management, a firm that has been providing specialized compliance advisory services since 1992 to 2,000 clients. For more information, contact him at rkusserow@strategicm.com.

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Copyright © 2013 Strategic Management Services, LLC.  Published with permission.