WellCare faces whistle-blower case over denying payment for hospital stays

TAMPA — Six former administrators for WellCare Health Plans say they were fired in late 2012 for resisting corporate pressure to deny paying for legitimate hospital stays, according to a recently unsealed federal lawsuit.

The civil lawsuit was filed in May 2013 but was unsealed last week after the federal government declined to join the case. That means the fired administrators are on their own, should the case proceed.

WellCare is a major contractor for Florida's Medicaid and Medicare patients enrolled in managed care plans, and one of the Tampa Bay area's largest public companies. It has been trying to move beyond a well-publicized federal fraud investigation that ignited in 2007 with an FBI raid of its headquarters. That case culminated this year in the convictions of four former WellCare executives accused of conspiring to keep funds the company should have returned to the state.

The allegations in the newly unsealed lawsuit occurred after those executives had left and have nothing to do with them.

In this newer lawsuit, the plaintiffs allege that WellCare executives, including Chief Financial Officer Tom Tran, worried in 2012 that the company was "bleeding" money. Over the course of a year, the insurer had reduced its denial rate for hospital stays from a high of 14 percent to 2 percent, the industry average, documents say.

"We are losing too much money and must increase our denial rates," the suit quotes Tran as saying at a meeting in 2012.

As a result, the suit says, inpatient denial rates began to climb back up in late 2012. WellCare committed fraud, plaintiffs allege, because it continued to get Medicaid and Medicare money for each enrollee, though it wasn't paying for medically necessary services.

The plaintiffs include Kirk Cianciolo, who was vice president of care management, and Karen Ross, the vice president of clinical management. They are represented by Kevin Darken, with the Tampa firm of Barry Cohen, who represented the whistle-blower whose claims led to the 2007 federal raid.

A WellCare spokeswoman said the company is reviewing the case. "WellCare takes all allegations of misconduct very seriously and investigates every allegation," said Crystal Warwell Walker. "WellCare is deeply committed to regulatory compliance and ethical behavior. We have strong systems and processes in place to support a culture of integrity, personal accountability and transparency."

WellCare's stock prices went up more than 4 percent Wednesday after the company released its third-quarter financial report. Membership in September increased 43 percent over the previous year to 4 million. Premium revenue for the third quarter of 2014 increased 35 percent, to $3.3 billion.

Contact Jodie Tillman at jtillman@tampabay.com or (813) 226-3374. Follow @jtillmantimes.