In November 2017, A former general counsel of insurer WellCare Health Plans Inc was sentenced to six months in prison for making a false statement to Florida’s Medicaid program as part of what prosecutors called a $35 million healthcare fraud scheme. The jury ordered M.S Bereday to pay a $50,000 fine because of his wrongdoing in the Florida Medicaid program.
In 2013, four other executives were convicted guilty of fraud-related charges: former WellCare President and CEO Todd Farha, former Chief Financial Officer Paul Behrens, former Vice President of Clinical Services William Kale, and former Vice President of Medical Economics Peter Clay.
The four executives filed an appeal, claiming insufficient evidence to convict them of the offenses. However, the appeals judges affirmed their convictions, saying they were aware of Florida’s 80/20 statute and had even prepared to pay $1 million to Florida’s Agency for Health Care Administration to avoid suspicion.
WellCare continued to profit from its Medicaid operation despite the fraud investigation that has ensnared its top executives. In February, the insurer announced that at the end of 2016, it had grown its Medicaid membership to 2.5 million, a 6.5 percent increase from the previous year. Its acquisition of Care1st Arizona and portions of Advocare Corp.’s Medicaid assets contributed to this growth.
WellCare runs health maintenance organizations (HMOs) in various states that cater to government-sponsored healthcare benefit programs such as Medicaid. StayWell and Health ease, two WellCare HMOs in Florida, have signed contracts with the AHCA to provide Florida Medicaid Program participants with various services, including behavioral health treatments.
State of Florida response to the Allegations
Thaddeus Bereday, who was indicted in 2011 along with four other former WellCare executives, was sentenced by U.S. District Judge James Moody in Tampa, Florida, after pleading guilty to a false statement charge in June, according to court records.
The state of Florida established legislation in 2002 requiring Florida Medicaid HMOs to spend 80% of Medicaid premiums collected for mental health care on providing those services.
To lower WellCare HMOs’ contractual repayment obligations for mental health care services, the defendants in this case erroneously and fraudulently submitted inflated expense figures in the company’s yearly reports to the AHCA. On June 10, 2013, a federal jury convicted Bereday’s co-defendants guilty.
In May 2014, Judge Moody sentenced Farha to 36 months in prison, Behrens to 24 months in jail, and Kale to one year and one day in prison, for their respective roles in the fraud. Clay has lent a five-year probationary term. The defendants appealed their convictions, which were all upheld in August 2016 by the Eleventh Circuit.
The US filed related charges against WellCare in an Information and Deferred Prosecution Agreement (“DPA”) on May 5, 2009. WellCare was obliged to pay $40 million in restitution, forfeit another $40 million to the US, and cooperate with the government’s criminal investigation under the terms of the DPA.
The Office of Inspector General of the United States Department of Health and Human Services, the Federal Bureau of Investigation, and the Florida Medicaid Fraud Control Unit investigated this case WellCare in a statement that said it fully cooperated in the investigation and has resolved all issues directly involving the company.
