Bloomberg News

WellCare to Pay $137.5 Million to Settle False Claims Case

April 03, 2012

WellCare Health Plans Inc. (WCG:US) agreed to pay $137.5 million to the U.S. and nine states to resolve civil claims that it overbilled the Medicare and Medicaid programs, the U.S. Justice Department said.

WellCare, a Tampa, Florida-based insurer, paid $80 million in 2009 to resolve a criminal investigation that led to a guilty plea by a former analyst and charges against five other executives, including ex-Chief Executive Officer Todd Farha, according to a statement today from the office of U.S. Attorney Robert E. O’Neill in Tampa.

The civil settlement resolves claims including that WellCare inflated what it said it spent on medical care to avoid returning money to Medicaid and that it knowingly retained overpayments received from Florida’s Medicaid program, O’Neill said in the statement. Medicaid is the government medical assistance program for low-income patients.

“This settlement should serve as notice to those defrauding state and federal health-care programs that, in addition to appropriate criminal prosecutions, we will utilize civil suits to root out their conduct and recover their ill- gotten gains,” O’Neill said.

Denise Malacca, a WellCare spokeswoman, declined to comment on the settlement beyond a company statement on March 23. It announced then that a settlement had been reached, and it wouldn’t have a material impact on the company’s finances this year.

‘Transformed Company’

“We are pleased that these matters are fully resolved,” Chief Executive Officer Alec Cunningham said in a statement that day. “WellCare is a transformed company that is focused on providing quality, cost-effective health-care solutions.”

The company also said today that O’Neill’s office had agreed to an early end to a three-year deferred-prosecution agreement entered in May 2009.

Prosecutors, who will drop criminal charges within five days, agreed to consider an early termination after reviewing WellCare’s remedial actions and compliance with health-care laws, as well as written reports from a monitor, the company said.

The settlement resolves four lawsuits filed under the U.S. False Claims Act, which lets whistle-blowers sue on behalf of the government and share in any recovery. Three of those cases were filed in the Middle District of Florida, and one was filed in Connecticut, according to O’Neill. The Justice Department investigated the cases and joined them.

Financial Analyst

Sean Hellein, a former WellCare financial analyst whose complaint initiated the probe, will get $20.75 million, according to O’Neill. Three others -- Clark Bolton, SF United Partners Inc. and Eugene Gonzalez -- will split $4.66 million, O’Neill said.

The attorneys for SF United Partners, Bob Thomas and Suzanne Durrell, said in a statement, “We are enormously pleased for our clients, who took considerable personal risk in coming forward to alert law enforcement of a variety of fraud schemes perpetrated by WellCare.”

The company may be required to pay $35 million more if it’s sold or has a change in control in the next three years, according to O’Neill.

The states sharing in the settlement are Connecticut, Florida, Georgia, Hawaii, Illinois, Indiana, Missouri, New York and Ohio, according to O’Neill.

To contact the reporter on this story: David Voreacos in Newark, New Jersey, at dvoreacos@bloomberg.net

To contact the editor responsible for this story: Andrew Dunn at adunn8@bloomberg.net.


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Companies Mentioned

  • WCG
    (WellCare Health Plans Inc)
    • $64.04 USD
    • 0.31
    • 0.48%
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