Healthcare Business News

Former top WellCare execs sentenced to prison in fraud case

By Rachel Landen
Posted: May 19, 2014 - 7:30 pm ET

A federal judge today sentenced former WellCare CEO Todd Farha to three years in prison for his involvement in a scheme to defraud Florida's Medicaid program of millions of dollars. Two other former WellCare executives also received sentences while a fourth received probation, a $10,000 fine and community service.

U.S. District Judge James S. Moody Jr. handed down Farha's sentence Monday morning, nearly a year after he was convicted by a federal jury in Tampa of two counts of healthcare fraud. The sentence for Farha was not as severe as it could have been, however, as each conviction carried a maximum possible sentence of 10 years.

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Moody also levied a $50,000 fine on Farha, due to be paid in full immediately.

Former WellCare Chief Financial Officer Paul Behrens, who was convicted of two counts of healthcare fraud and two counts of making false statements relating to healthcare matters, received a two-year prison sentence. And William Kale, former vice president of WellCare subsidiary Harmony Behavioral Health, also convicted of two counts of healthcare fraud, was sentenced to one year behind bars.

One executive embroiled in the scheme, former WellCare Vice President Peter Clay, did not receive any prison time. Clay, who was found guilty of two counts of making false statements to federal agents, was ordered by Moody to pay a $10,000 fine in addition to five years of probation and 200 hours of community service.

The four former executives who ran two Medicaid HMOs in Florida were indicted in U.S. District Court last year for their participation in a plan that took millions of dollars from Medicaid. Prosecutors alleged that the corporation, under the direction of Farha and other executives, submitted inflated behavioral healthcare expenses in WellCare’s annual reports to the Agency for Health Care Administration, which administers the state’s Medicaid program.

Under a 2002 statute, if a Florida Medicaid managed-care plan spends less than 80% of premiums on patient care, it is required to return the difference to the agency. But by reporting higher than actual patient-care expenses, the WellCare executives were able to keep money that should have been spent on patient care or otherwise returned to the government-funded program.

WellCare was charged in 2009 with the conspiracy, but those charges were later dropped as part of a deferred-prosecution agreement, which required the company’s cooperation with the government investigation. Additionally, WellCare agreed to pay $40 million in restitution, forfeit another $40 million to the government, and pay $137.5 million in civil fines and penalties.

WellCare provides health and prescription drug plans to nearly 3.5 million members nationwide and continues to run two Medicaid managed-care companies in Florida.

Follow Rachel Landen on Twitter: @MHrlanden

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