Four Former WellCare Executives Found Guilty
Tampa, Florida - United States Attorney Robert E. O'Neill and Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division announce that a federal jury today found four former executives of WellCare Health Plans, Inc. (“WellCare”) guilty of various charges, including health care fraud, making false statements relating to health care matters, and making false statements to a law enforcement officer. Specifically, former WellCare Chief Executive Officer Todd S. Farha (45, Tampa) was convicted of two counts of health care fraud; former WellCare Chief Financial Officer Paul L. Behrens (51, Odessa) was convicted of two counts of making false statements relating to health care matters and two counts of health care fraud; William L. Kale (63, Oldsmar), former Vice President of Harmony Behavioral Health, Inc. (a wholly-owned subsidiary of WellCare), was found guilty of two counts of health care fraud; and Peter E. Clay (56, Wellesley, Massachusetts), 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 ten years’ imprisonment. The maximum penalty for all other counts is five years’ imprisonment. A sentencing date has not yet been set.
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 U.S. Attorney’s Office will decide, at a later date, whether to retry the individuals on those charges.
Thaddeus M.S. Bereday (Tampa), WellCare's former General Counsel, was severed from the trial in February of this year. He will be tried separately, at a later date.
On March 2, 2011, a federal grand jury sitting in Tampa, Florida returned an indictment charging Farha, Behrens, Kale, and Clay 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, by making false and fraudulent statements relating to expenditure information for behavioral health care services. WellCare operates health maintenance organizations (“HMOs”) in several states targeted for government-sponsored health care benefit programs like Medicaid. Two WellCare HMOs operating in Florida, StayWell and Healthease, contracted with the Agency for Health Care Administration (“AHCA”), the Florida agency which administers the Medicaid program, to provide Florida Medicaid program recipients with an array of services, including behavioral health services.
In 2002, Florida enacted a statute that required Florida Medicaid HMOs to expend 80% of the Medicaid premium paid for certain behavioral health services upon the provision of those services. In the event that the HMO expended less than 80% of the premium, the difference was required to be returned to AHCA. As part of the scheme, the individuals falsely and fraudulently submitted inflated expenditure information in the company’s annual reports to AHCA, in order to reduce the WellCare HMOs’ contractual payback obligations for behavioral health care services.
On May 5, 2009 the government filed related charges in an information and Deferred Prosecution Agreement ("DPA") against WellCare. Pursuant to that DPA, 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 company complied with all of the requirements of the DPA. As a result, the information was later dismissed by the court following a government motion.
Also, in May 2009, an information and plea agreement for Gregory West (55, Tampa) a former WellCare analyst, was unsealed. In his plea agreement, West admitted to participating in the scheme to defraud the Medicaid program and agreed to cooperate in the government's investigation. At trial, West provided extensive and detailed testimony explaining the complex scheme. Other former WellCare executives provided additional testimony about the four individuals' roles in the scheme.
“Today’s guilty verdicts send a clear message that health care fraud will not be tolerated in the Middle District of Florida,” said U.S. Attorney Robert O’Neill. “The greed of those who siphon funds from individuals dependent upon federal healthcare programs must be investigated and prosecuted to the full extent of the law.”
“Medicaid recipients deserve quality, honest healthcare,” said Christopher B. Dennis, Special Agent in Charge, Health and Human Services, Office of Inspector General, Office of Investigations. “Today’s guilty verdicts should serve as a clear warning that anyone – no matter what their status - who defrauds the American people and abuses their trust will be brought to justice.”
This case was investigated by the U.S. Department of Health and Human Services, Office of Inspector General, the Federal Bureau of Investigation, and the Florida Attorney General's Medicaid Fraud Control Unit. It was prosecuted by Assistant United States Attorneys Jay Trezevant and Cherie Krigsman, along with Department of Justice Senior Trial Attorney John Michelich and Special Assistant United States Attorney John Bowers.