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WellCare seeks $365 million in restitution from former executives

TAMPA — WellCare Health Plans has long contended it was a victim of three former executives convicted of defrauding the Florida Medicaid program. Now, the Tampa-based insurer wants the men to pay it $365 million in restitution.

While WellCare had to pay $80 million to settle corporate fraud charges and also reached a $137 million civil settlement with the government, its lawyers argue in federal documents that criminal conduct was limited to a few people at the top and that the new leadership took quick action to right the ship.

"Its board and the vast majority of its employees did not participate in and did not know about defendants' health care fraud," says the April 16 document asking a federal judge to award restitution.

After news of a federal investigation into the company's leadership broke in 2007, WellCare's stock prices plummeted. "Defendants' conduct threatened the company's very existence," the court documents say.

WellCare says it paid the three defendants — former chief executive officer Todd Farha, former chief financial officer Paul Behrens and former vice president William Kale — compensation of $134 million "for what they passed off as honest services, but which they knew were dishonest, fraudulent services.

"To this day, defendants have every penny they made from WellCare."

WellCare also says it deserves restitution for the fees incurred to correct its audits, conduct an internal investigation and hire attorneys.

A federal jury last June found Farha, Behrens and Kale guilty of two counts of health care fraud for submitting false expenditure reports to the state Medicaid program. The jury also found Behrens guilty of two other charges of making false statements related to health care matters.

On each of the health care fraud counts, Farha, Behrens and Kale face up to 10 years in prison. The other charges carry a maximum of five years.

A fourth defendant, former vice president Peter E. Clay, was found guilty of making false statements to federal agents.

Sentencing is scheduled for May 19.

According to the March 2011 indictment, WellCare took Medicaid money from Florida's Agency for Health Care Administration with the understanding that if it did not use 80 percent of the funds set aside for behavioral health services, the difference was to be returned to the state. But, prosecutors say, WellCare executives conspired to inflate what they actually spent to reduce the amount they had to return.

Jodie Tillman can be reached at or (813) 226-3374.

WellCare seeks $365 million in restitution from former executives 04/24/14 [Last modified: Thursday, April 24, 2014 7:07pm]
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