Former WellCare CEO Todd Farha and former CFO Paul L. Behrens must pay the SEC $26 million in connection with a scheme to avoid returning $40 million in Florida Medicaid payments. Both defendants have been convicted of health care fraud and have entered into a consent judgment with the SEC.
In 2009 WellCare had paid $40 million in restitution and $40 million to the United States. In a related qui tam case, WellCare also paid $137.5 million in civil fines and penalties to Florida, Connecticut, Georgia, Hawaii, Illinois, Indiana, Missouri, New York, and Ohio.
The original violations were related to WellCare’s operation of health maintenance organizations (HMOs) which are charged with providing Florida Medicaid program recipients with different services, including behavioral health services.
As per Florida laws, Florida Medicaid HMOs are required to “expend 80% of the Medicaid premium paid for certain behavioral health services on the provision of those services.” If an HMO expends less, the difference must be returned to Florida Medicaid’s coffers. Farha and Behrens were directly responsible for submitting inflated expenditure information to avoid having to return millions of dollars.
The SEC has become involved in the matter in connection with allegations of securities violations first mentioned in a lawsuit by a WellCare shareholder.
After 200 FBI agents raided WellCare’s Florida headquarters to find evidence of the Medicaid fraud, company shares went down by 73%. Eastwood Enterprises LLC, the WellCare shareholder, sued Farha, Behrens, and WellCare, alleging that they had disseminated false information and concealed adverse facts.
The plaintiff filed a class action suit encompassing all affected shareholders. The case was settled at $200 million.
Based on the recent judgments in the case, by May 1st, Farha and Behrens must pay both the SEC and WellCare restitution and civil penalties. In the case of Farha, he will pay the SEC $12.5 million and WellCare $7.5 million.
Farha is also banned from acting as an officer or director of a securities issuer for 6 years. On the other hand, Behrens will pay the SEC $4.5 million and WellCare $1.5 million.
The U.S. Supreme Court has declined to hear Farha’s appeal. The former WellCare CEO is currently serving a 3-year sentence at a minimum security federal prison in Alabama. Following his conviction, Farha had also made a failed attempt to cash in on over $30 millions of dollars worth of WellCare shares, which he claimed to own.
If your employer or other healthcare company is cheating Florida Medicaid and you have first hand knowledge and proof, you may be eligible for a substantial whistleblower award. Call the Hotline or report online here.