WellCare Health Plans, Inc. Agrees to Pay $137.5 Million to Resolve False Claims Act Allegations
Tampa, Florida - United States Attorney Robert E. O’Neill announces the settlement of four lawsuits alleging violations of the federal False Claims Act by Tampa, Florida-based WellCare Health Plans, Inc. (WellCare). Wellcare provides managed health care services for approximately 2.6 million Medicare and Medicaid beneficiaries, nationwide. The lawsuits were initiated by whistleblowers (known as relators) in four separate suits filed under the qui tam provisions of the False Claims Act. The United States intervened in, investigated, and negotiated settlement of those suits. Three of those suits are pending in the Middle District of Florida; the remaining suit is pending in the District of Connecticut.
The lawsuits alleged a number of schemes to submit false claims to Medicare and various Medicaid programs, including that WellCare: (1) falsely inflated the amount it claimed to be spending on medical care in order to avoid returning money to Medicaid and other programs in various states, including Florida Medicaid and Florida Healthy Kids (Florida’s CHIP program); (2) knowingly retained overpayments it had received from Florida Medicaid for infant care; (3) falsified data that misrepresented the medical conditions of patients and the treatments they received; (4) engaged in certain marketing abuses, including the “cherrypicking” of healthy patients in order to avoid future costs; (5) manipulated “grades of service” or other performance metrics regarding its call center; and (6) operated a sham Special Investigations Unit.
The settlement announced today resolves these and other allegations and requires that Wellcare pay the United States and nine states – Connecticut, Florida, Georgia, Hawaii, Illinois, Indiana, Missouri, New York, and Ohio – a total of $137.5 million, plus interest, in fixed payments over a period of three years. WellCare may also be required to pay an additional $35 million contingent payment in the event that the company is sold or experiences a change in control within three years after this agreement.
This is the second monetary settlement reached with WellCare since the government initiated a criminal and civil investigation of the company in 2006. On May 5, 2009, in order to resolve potential criminal charges related to losses by the Florida Medicaid and Healthy Kids programs, WellCare entered into a Deferred Prosecution Agreement (DPA) with the United States Attorney’s Office (MDFL), pursuant to which WellCare paid $40 million in restitution and forfeited an additional $40 million. The USAO/ MDFL has also pursued criminal charges against multiple former Wellcare employees; WellCare has cooperated in those investigations. One former WellCare analyst, Gregory West, pleaded guilty to a conspiracy charge shortly after the execution of a search warrant on WellCare’s corporate headquarters in Tampa; he is currently awaiting sentencing. Five former executives – including former CEO Todd Farha, former CFO Paul Behrens, and former general counsel Thaddeus Bereday – were indicted in March 2011 and are currently awaiting trial, which is presently scheduled for January 2013. Additionally, Wellcare previously executed a Corporate Integrity Agreement (CIA) with the Office of Inspector General of the U.S. Department of Health and Human Services (HHS-OIG), that imposes compliance obligations on the company for a period of five years.
The resolution of these civil suits brings total recoveries from WellCare to $217.5 million. “The monies recovered in restitution and from this settlement agreement will go to the federal and state programs which suffered these losses, while the forfeited funds will go to law enforcement to help fund future investigations,” said U.S. Attorney O’Neill. “In an era of decreasing federal and state budgets, and increasing healthcare costs, we must pursue all available civil remedies to recover losses suffered by government healthcare programs. This settlement should serve as notice to those defrauding state and federal healthcare programs that, in addition to appropriate criminal prosecutions, we will utilize civil suits to root out their conduct and recover their ill-gotten gains.”
Whistleblowers who bring a lawsuit under the False Claims Act are entitled to receive a percentage of the United States' recovery. Sean Hellein, a financial analyst formerly employed by WellCare, whose qui tam complaint initiated the government's investigation, will receive approximately $20.75 million, representing his share of the $40 million received by the United States in restitution and the federal portion of the $137.5 million civil settlement. Three other relators - Clark Bolton, SF United Partners, Inc., and Eugene Gonzalez - will split about $4.66 million and will be entitled to receive an additional share if WellCare makes a contingency payment pursuant to the settlement agreement.
These suits were investigated jointly by the Federal Bureau of Investigation, HHS-OIG, and the Florida Attorney General’s Medicaid Fraud Control Unit. These cases were handled by attorneys from the Commercial Litigation Branch of the Justice Department’s Civil Division, the United States Attorney’s Office for the Middle District of Florida, the United States Attorney’s Office for the District of Connecticut, and the National Association of Medicaid Fraud Control Units. Commercial Litigation Branch Trial Attorney Allie Pang, Middle District of Florida Assistant U.S. Attorney Charles T. Harden III, and Connecticut Assistant U.S. Attorney Richard M. Molot represented the United States in these cases.
The claims settled by today’s agreement are allegations only; there has been no determination of liability except as noted in the referenced criminal proceeding. The resolution of these allegations will not affect WellCare’s ability to deliver health care services to any person.