The four executives were indicted for inflating the HMOs' behavioral-health expenses in corporate filings, which was illegal because of a state law that requires Medicaid managed-care plans to devote at least 80% of all premiums to patient care. Any Medicaid managed-care HMO that spent less than that amount on patient care was required to return the difference to the state Agency for Health Care Administration.
However, prosecutors alleged, the executives and the corporation hatched a plan to conceal the company's true expenses on patient care, allowing it to keep money that should have been spent on patient care or returned to the government-funded program for the poor and disabled.
“The greed of those who siphon funds from individuals dependent upon federal healthcare programs must be investigated and prosecuted to the full extent of the law,” U.S. Attorney Robert O'Neill, whose office prosecuted the case, said in a written statement.
The jury acquitted or was deadlocked on seven other charges against Farha and Kale, five others against Behrens, and nine against Clay.
U.S. District Judge James S. Moody Jr. allowed the four men to remain free on bond until their sentencing hearings, which have not yet been scheduled.
Much of the evidence against Farha and the other executives was from WellCare insiders, including a former financial analyst for the company who pleaded guilty to a conspiracy charge and cooperated with the government.
WellCare, which has 2.7 million plan members nationwide and still runs Florida Medicaid HMOs today, was charged with the scheme in 2009. Those charges were dismissed after the company completed a deferred-prosecution agreement, which required cooperation with the government's investigation. WellCare agreed to pay a total of $334 million in 2010 in various criminal and civil penalties, including $40 million in restitution.
Federal charges are still pending against former WellCare general counsel Thaddeus M.S. Bereday of Tampa.
WellCare separately sued Farha, Berhens and Bereday, but that case was on hold pending the outcomes of the criminal trials. A WellCare spokesperson could not be reached for comment.
Farha, Behrens and Bereday were also sued by the Securities and Exchange Commission. In March 2012, that case was administratively dismissed with an accompanying order for the SEC to refile its case within 60 days of Monday's verdict. SEC officials could not be reached for comment Tuesday.
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