Eleventh Circuit Affirms All Convictions For Former WellCare Executives
Tampa, FL – United States Attorney A. Lee Bentley, III announces that the United States Court of Appeals for the Eleventh Circuit has affirmed the convictions for all four defendants who stood trial in 2013 in the case of United States v. Peter Clay et al., commonly known as “The WellCare case.”
In June 2013, a federal jury in the Middle District of Florida found former WellCare Chief Executive Officer Todd S. Farha guilty of two counts of health care fraud; former WellCare Chief Financial Officer Paul L. Behrens guilty of two counts of making false statements relating to health care matters and two counts of health care fraud; William L. Kale, former Vice President of Harmony Behavioral Health, Inc. (a wholly-owned subsidiary of WellCare), guilty of two counts of health care fraud; and Peter E. Clay, former WellCare Vice President of Medical Economics, guilty of making false statements to a law enforcement officer.
In May 2014, the district court sentenced Farha to 36 months in prison, Behrens to 24 months, and Kale to one year and one day, and also sentenced Clay to five years’ probation (and no imprisonment). Clay then began serving his probation, but Farha, Behrens, and Kale have remained free pending the outcome of their appeal.
In a 124-page opinion and “[a]fter reviewing the extensive trial record and with the benefit of oral argument,” the Eleventh Circuit has now affirmed the jury’s verdicts against all four defendants.
As the Court summarized the case against Farha, Behrens, Kale, and Clay: “At trial, the government proved that together the defendants participated in a fraudulent scheme to file false Medicaid expense reports that misrepresented and overstated the amounts [that WellCare subsidiaries Staywell Health Plan of Florida and HealthEase of Florida, Inc.] spent on medical services for Medicaid patients, specifically outpatient behavioral health care services. By overstating these expenses, the defendants helped Staywell and HealthEase retain millions of dollars in tax-subsidized Medicaid funds that they should have refunded to the Florida Agency for Health Care Administration (‘AHCA’). This, in turn, inflated the profits of Staywell, HealthEase, and WellCare and earned the defendants financial rewards.”
The Court of Appeals characterized the evidence of criminal intent in this case as “overwhelming” and rejected the defendants’ characterization of their convictions as “the improper criminalization of routine contractual and regulatory disagreements.” Specifically, the Court declined to credit the defendants’ argument that their false reports of expenditures on mental healthcare for the poor, which were designed to retain publicly-funded Medicaid monies as profit, were “reasonable” interpretations of their statutory and contractual obligations, stating that it “need not further analyze the defendants’ post-hoc interpretation” because the defendants “did not believe it, knew what was required, and knew their answers were false.”
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. The case was handled on appeal by Assistant United States Attorney Karin B. Hoppmann. It was prosecuted by Assistant United States Attorney Jay Trezevant, Assistant United States Attorney Cherie Krigsman, Senior Trial Attorney John Michelich of the Department of Justice’s Criminal Division’s Fraud Section, and Special Assistant United States Attorney John Bowers of the Middle District of Florida.