WellCare Health Plans has entered into settlement agreements to cap costly legal expenses for two former top executives convicted of defrauding Medicaid in a case that started nearly a decade ago.
The settlements also allow the executives to cash in stock, which had restrictions previously.
Going forward, WellCare will cover no more than $9 million in legal fees for former CEO Todd Farha and former CFO Paul Behrens, who were found guilty of defrauding the Medicaid program by fudging medical claims numbers. A federal appeals court upheld the convictions for Farha, Behrens and two others this past August. One other former WellCare executive is scheduled to be tried this January.
Specifically, the terms of the deal stipulate that Farha must pay $7.5 million to WellCare, and Behrens must pay $1.5 million, according to a federal securities filing. In exchange, WellCare will use that money for their legal expenses and lift some restrictions on their WellCare stock. WellCare also agreed it won't attempt to recoup previous legal expenses from Farha or Behrens, which it had considered, but it also won't pay anything further toward their cases.
As of Sept. 30, WellCare paid $227.3 million in legal fees tied to the litigation, which started in 2007. The company has marked those fees as general administrative expenses on its financial documents.
WellCare did not comment beyond the filing. The Tampa, Fla.-based company has almost 2.8 million Medicaid and Medicare Advantage members and more than 1 million Medicare Part D enrollees, and it expects revenue from premiums will approach $14 billion by the end of the year.
WellCare has paid hundreds of millions of dollars in other civil settlements and penalties tied to the case. The appeals court judges said this past January the evidence in the case was “overwhelming” against the former WellCare executives.
