WellCare Executives, Health Care Fraud, Florida 2011

A federal jury in Tampa has found four former executives of WellCare Health Plans Inc., a health maintenance organization (HMO) operator, 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.

The defendants, Todd S. Farha, 45, of Tampa, Paul L. Behrens, 51, Odessa, Fla., William L. Kale, 63, of Oldsmar, Fla., and Peter E. Clay, 56, of Wellesley, Mass., were convicted of their roles in a scheme to defraud the Florida Medicaid program from the summer of 2003 to the fall of 2007.

The scheme involved making false and fraudulent statements relating to expenditure information for behavioral health care services. The defendants falsely and fraudulently submitted inflated expenditure information in the company’s annual reports to the Agency for Health Care Administration (AHCA), in order to reduce the WellCare HMOs’ contractual payback obligations for behavioral health care services.

The maximum penalty for each of the health care fraud counts is 10 years in prison, while the maximum penalty for all other counts is five years in prison. A sentencing date has not yet been set.

WellCare operates 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 AHCA to provide Florida Medicaid program recipients with an array of services, including behavioral health services.

On March 2, 2011, a federal grand jury sitting in Tampa returned an indictment charging Farha, Behrens, Kale, and Clay with various federal criminal violations related to the scheme. In May 2009, an information and plea agreement for Gregory West, 55, of Tampa, a former WellCare analyst, was unsealed. West admitted to participating in the scheme and agreed to cooperate in the government’s investigation.

As part of the scheme, the defendants 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. The company complied with all of the requirements of a deferred prosecution agreement, which included paying $40 million in restitution and forfeiting another $40 million to the United States.

Todd S. Farha, a former WellCare Chief Executive Officer, was convicted of two counts of health care fraud. Paul L. Behrens, a former WellCare Chief Financial Officer, was convicted of two counts of making false statements relating to health care matters and two counts of health care fraud. William L. Kale, a former vice president of Harmony Behavioral Health Inc., was found guilty of two counts of health care fraud. Peter E. Clay, a former WellCare vice president of medical economics, was found guilty of making false statements to a law enforcement officer.

The case was announced by Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Robert E. O’Neill of the Middle District of Florida, and Special Agent in Charge Christopher B. Dennis of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Office of Investigations Miami office.

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