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Former WellCare employee testifies on role in Medicaid fraud

TAMPA — A former WellCare employee charged with Medicaid fraud testified Thursday that the company's former top executives orchestrated the plan to keep millions of dollars that should have gone back to the state.

Gregory West, who was a senior financial planner, testified in federal district court that the company had sent false information to the state Agency for Health Care Administration. The documents outlined how much state money the company spent on mental health services for patients insured through WellCare's HMOs.

When asked how he knew the information in the documents was false, West said, "Because I had to calculate it."

West, who said he was acting at the behest of higher-ups, pleaded guilty to charges of conspiracy to commit Medicaid fraud in 2007 and agreed to cooperate with federal prosecutors in an effort to get a lighter punishment. He has not yet been sentenced.

His testimony in the three-month trial is scheduled to continue next week. Defense lawyers are expected to begin questioning him mid-week.

Former chief executive officer Todd Farha and four other former executives — former general counsel Thaddeus Bereday, former chief financial officer Paul L. Behrens and former vice presidents William Kale and Peter Clay — were indicted in 2011 on charges of conspiracy to commit Medicaid fraud and making false statements. Bereday is being tried separately.

The indictment says WellCare, based in Tampa, took Medicaid money from the state with the understanding that if it did not use 80 percent of the funds allotted for behavioral health services, the difference was to be returned to the state.

But, prosecutors said, WellCare executives conspired to inflate what they actually spent in order to reduce the amount they had to return. That strategy involved the creation of a new company, which WellCare's two Florida HMOs paid for behavioral services, to inflate costs, court documents say.

Prosecutors say WellCare shortchanged the state by at least $30 million.

Defense attorneys say the expenses were legitimate and that the state knew all along about the arrangement but failed to give WellCare any guidance.

The company paid $80 million in May 2009 and reached a civil settlement with the Department of Justice for $137 million in 2010. A whistleblower put profits of the alleged fraud between $400 million and $600 million.

West testified Thursday that he began working on the state reports around 2004. He said a lower-ranking financial analyst had come to him, holding a two-inch thick folder of documents and pleading for help. "His hands shook the whole time he talked to me," West said.

Part of the way that WellCare inflated its service costs — and therefore decreased what it had to refund to the state — was by including items that had nothing to do with behavioral health, West said.

He said two federal agents had shown up at his home the night before they raided WellCare offices in October 2007. He agreed to speak with them for two hours that evening though he said they did not tell him about the coming office raid.

During that raid, agents herded employees into a conference room and called them out, one-by-one, for interviews. West said he was interviewed again that day.

Asked why he agreed to plead guilty, he said he wanted "to tell the truth no matter what ... and let the chips fall as they may." He added he wanted "to reduce how many chips fall on me."

Jodie Tillman can be reached at jtillman@tampabay.com or (813) 226-3374.

Former WellCare employee testifies on role in Medicaid fraud 03/07/13 [Last modified: Thursday, March 7, 2013 9:30pm]

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