Former WellCare Executives Sentenced For Health Care Fraud

Tampa – U.S. District Judge James S. Moody, Jr. today sentenced former WellCare Chief Executive Officer Todd S. Farha (45, Tampa) to 36 months in prison for defrauding the Florida Medicaid program. In addition, the Court also respectively sentenced Paul L. Behrens (52, Odessa) to 24 months’ imprisonment; William L. Kale (64, Oldsmar) to one year and a day in prison; and Peter E. Clay (57, Wellesley, Massachusetts) to five years’ probation.

All four were convicted by a federal jury on June 10, 2013. Specifically, Farha was convicted of two counts of health care fraud; former WellCare Chief Financial Officer Paul L. Behrens was convicted 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), was found guilty of two counts of health care fraud; and Peter E. Clay, former WellCare Vice President of Medical Economics, was found guilty of making false statements to a law enforcement officer.

“Today’s sentences are the culmination of a lengthy and comprehensive investigation and prosecution of egregious crimes of fraud and greed,” said U.S. Attorney for the Middle District of Florida A. Lee Bentley III.  “We hope that the sentences imposed will send a strong message that individuals engaging in health care fraud will be prosecuted to the full extent of the law.”

“The former WellCare executives chose to engage in corrosive and illegal conduct. Unsatisfied with the wealth and power they already had, they chose to steal from the American public,” said Acting Special Agent in Charge Omar Perez Aybar, HHS-OIG Miami Regional Office. “Today they are being held accountable for their actions.  The sentences serve as a warning to other corporate executives who may contemplate such action and are a testament to Justice truly being blind to power, position, and status.” 

According to court records and evidence at trial, Farha and others orchestrated a scheme to defraud the Florida Medicaid program from the summer of 2003 through the fall of 2007 by making fraudulent statements relating to expenditures for behavioral health care services.

WellCare operates health maintenance organizations (HMOs) in several states providing services through 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 that 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 percent 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 percent of the premium, the difference was required to be returned to AHCA. As part of the scheme, Farha and others fraudulently submitted inflated expenditure information in the company’s annual reports to AHCA to reduce the WellCare HMOs’ contractual repayment obligations for behavioral health care services.

On May 5, 2009 the government filed related charges in an information and a 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.  In a related civil qui tam case, Wellcare agreed to pay $137.5 million in civil fines and penalties.

This case was investigated by the U.S. Department of Health and Human Services Office of Inspector General, the FBI, and the Florida Attorney General's Medicaid Fraud Control Unit. The case was prosecuted by Senior Trial Attorney John Michelich of the Criminal Division’s Fraud Section and Senior Litigation Counsel Assistant United States Attorney Jay Trezevant, Assistant United States Attorney Cherie Krigsman, and Special Assistant United States Attorney John Bowers of the Middle District of Florida.