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Quo Warranto Exhbits in Petition Against Florida Attorney General Bill McCollum

Quo Warranto Exhbits in Petition Against Florida Attorney General Bill McCollum

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Exhibits in Petition For Writ of Quo Warranto against Florida Attorney General Bill McCollum, in charge of State's Medicaid Fraud Control Unit
Exhibits in Petition For Writ of Quo Warranto against Florida Attorney General Bill McCollum, in charge of State's Medicaid Fraud Control Unit

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APPENDIX EXHIBIT A

DECLARATION OF SEAN J. HELLEIN

IN SUPPORT OF PETITION FOR QUO WARRANTO

I, SEAN J. HELLEIN, declare as follows:

1. My name is Sean J. Hellein. I am over 21 years of age and suffer from no

mental or physical disabilities. I make this Declaration based on my personal knowledge

of the facts set forth herein.

2. 1 am a citizen of the State of Florida and have lived here all my life,

although 1 am temporarily on a sojourn out of the State for safety concerns and as a result

of an employment opportunity. I intend to return to Florida as my place of domicile as

safety, work and finances permit. I own my home in Florida, I hold a Florida State ID and

a Florida Voter ID, and T use an area code (813) Tampa cell phone number.

3. I was employed by WelICare Health Plans, Inc. ("WeHCare") in various

positions from November 2002 through October 2007, including as a Senior Financial

Analyst. Because of my position, 1 frequently spoke with, attended meetings with and had

interactions with the top management at WellCare.

4. During all relevant times hereto, I was disgusted with Wellcare's fraud

and had reported it to the FBI and the ·U:8. Attorney's Office. At such times, I was

cooperating as an insider, confidential informant for the FBI, the Office of the Inspector

General of the Department of Health and Human Services and the U.S. Attorney's Office.

In that role, and during all relevant times hereto, I wore audio and video surveillance

equipment almost daily to assist in the criminal and civil investigations of WellCare by

the Federal Government, all which were triggered by my filing of the original complaint

in the False Claims Act case referenced in the Original Quo Warranto Petition filed with this Court.

5. In June 2006, special concerns arose at WellCare regarding possible

significant obligations to repay Medicaid overpayments relating to past behavioral health encounters. Well Care had traditionally relied on providing false records to conceal these overpayments. However, at a point in time, the regulators at AReA began asking for more detailed information and WellCare's overpayment liability was becoming greater each year.

6. This concern was the result of the Florida law requiring that 80% of

monies advanced for behavioral encounters had to be spent On the patient or treatment for the patient ("80120 Law"). Around this time, Peter Clay, WellCare's Vice President of Medical Economics, feared a one-year liability could now exceed $1 OM.

7. As a result of these internal discussions, in the summer of 2006, Greg

West, another Senior Financial Analyst, prepared a spreadsheet report showing actual expenses versus the fraudulently reported expenses. The conclusion of this report was that, based on the Florida 80/20 Law requirement and considering WellCare's actual expenses, WellCare was currently liable to the State of Florida for approximately $23M in Medicaid overpayments.

8. The extent of this potential liability created a paruc among top

management who feared that discovery or disclosure of the $23M in liability would trigger increased scrutiny and discovery by the Government of WellCare's improper and fraudulent financial practices, as well as a severe drop in the value of Well Care's publicly traded stock. Management's primary concern was always creating and maintaining the

2

highest possible stock price for WellCare's stock, even by fraudulent means. WellCare management knew that the 80120 Law fraud was only one of numerous fraudulent means being used to bilk Florida's Medicaid system of hundreds of millions of do Bars.

9. Based on WellCare's own records, information [ obtained while at

WellCare and my training in WellCare's operations and financials, as well as in industry practices, J believe that from 2002 through 2007 WellCare defrauded ARCA and Florida's Medicaid system of more than $400M. The details of WellCare's fraudulent practices and how much monies were fraudulently obtained are set forth in my Seventh Amended Complaint which has been filed herewith.

l O. In late December 2006, AHCA requested detai1ed information and back-

up concerning behavioral encounters and their costs under the 80/20 Law for the fiscal years ending 2004 and 2005.

11. In January 2007, AHCA renewed its request for encounter cost back-up

under the 80/20 Law regarding two Medicaid di stricts. Because of the "smaller" dollars involved, I and others were instructed to fraudulently triple WellCare's actual costs and submit the falsely inflated claims data to AHCA. When this was done, AHCA followed up with an additional request under the 80/20 Law for other districts with much higher dollar volumes. I and others were instructed to answer AI-ICA but to now supply incomplete information or leave out of any response WellCare's actual costs. AReA requests under the 80/20 Law continued. Panic was setting in and now I and other WellCare staff were being told to simply fabricate cost data to avoid any significant liability to repay the Medicaid overpayments caused by the 80/20 Law. In prior years, an

3

arbitrary repayment number had been selected to make it appear as though WellCare was complying with the 80/20 Law.

12. The repayment problems caused by the 80/20 Law were on the agenda at a

very significant meeting of top WeHCare management held on January 26, 2007. In connection with that meeting, Mark Ryan, WellCare's top regulatory specialist and primary in-house lobbyist with the State of Florida, advised that he had great confidence the 80/20 Law would not be a problem after FY 2006 and that the matter was "being handled". This assumed fact that the 80/20 Law was "going away" was general knowledge and spoken of at WellCare often in the months after that meeting and in connection with AHCA's encounter data requests.

13. After January 26, 2007, Well Care management relaxed and no longer

expressed concern over the 80/20 Law repayments or the possible impact of repayment liability on WellCare's stock. I and others were simply told to finish supplying falsified data, however outrageous, because we were led to believe that when the 80120 Law went away, whatever we submitted would be accepted by ARCA because there would no longer be an 80/20 Law requirement moving forward and the AHeA regulators looking into the past 80/20 Law data and overpayments would drop their scrutiny and be reassigned to other duties.

14. Based on statements made by and/or originating with WellCare

management, on or about April 27, 2007 I advised my lawyers, and I believe others involved, that the 80/20 Law would be repealed and would no longer be Florida Jaw as the result of a legislative meeting to be held on May 3, 2007.

4

I say nothing further in this Declaration.

15. I subsequently teamed that on May 3, 2007 the Florida legislature voted in

favor of SB 1116, which repealed the 80/20 Law from the Florida Statutes.

16. , Shortly after the repeal of the 80120 Law, I met with an OIG agent who

showed me the 80/20 Law before and after May 3, 2007 and showed me a copy of where

Dr. Andrew Agwanobi signed a document approving the repeal of the 80/20 Law.

17. I am glad that the repeal of Florida's 80/20 Law was ultimately vetoed and

that it remains Florida law. In my opinion, based on my knowledge of WeHCare and

behavioral encounter charges generally, if the 80/20 Law had been repealed it would have

cost the Florida Medicaid system hundreds of millions in unnecessary charges and

unconscionable profit margins for HMOs.

I declare under penalty of perjury that the foregoing is true and correct.

Executed this ~ day of September, 2010.

»<«.

Sean J. Hellein

5

APPENDIX EXHIBITB

,:.' '1'\0,

UNITED STATES DISTRICT COURT 'DR THE MIDDLE DISTRICT OF FLORIDA TA\1PA DIVISION

UNITED STATES 0 k\1ERICA, STATE OF FLORIDA, STATE '" ilLINOIS, STATE OF lND~1\!A, STATE 0 LOUISIk~A, STATE' OF J\'EW YORK, ST ITE OF GEORGIA and

STATE OF HAW AIl x rel. SEAN J. HELLEIN,

Plaintiffs,

CASE NO.8:06-CV-OI079-T-30TGW

v.

WELLCARE HEALTH PLANS, INC.,

WELLCARE OF FLORIDA, INC., FILED UNDER SEAL

HARMONY BERA VIORAL HEALTH, PURSUANT TO 31 U.S.C

.. ---~.lNc., HEALTHEAS:E..J:IE,AL THPLi\NS __ . _ .. _. __ .. ~_§J73Q(b){hll1Q_;_~Q~~PL.A{:;.EJli

OF FLORIDA, INC., HEALTHEASEOF PRESS BOX OR El\>'TER ON

FLORIDA, INC., AMERIGROUP PUBLICLY ACCESSmLE

CORPORATION, AMpRIGROlJP SYSTEM

FLORIDA, INC., HU14ANA MEDICAL

PLAN, INC., d/b/a HUMANA FAMILY,

VALUE OPTIONS, INC., FLORIDA HEALTH . PARTNERS, INC., FLORIDA BEHAVIORAL

HEALTH, INC., UNITED HEALTHCARE .

OF FLORIDA, INC., UNITED HEALTH .

GROlJP, INC., UNITED HEALTHCARE

SERVICES, INC., d/b/a M1ERICHOICE and

VISTA HEALTHPLAN. INC., d/b/a BUENA

VISTA, TODD FARHA, PAl.JLBEHRENS and

THADDEUS BEREDA Y,

Defendants.

------------------------~!

SEVENTH AMENDED FALSE CLAIMS ACT COMPLAINT ~~DDEMANDFOR.ruRYT~

1. SEAN J. HELLEIN (hereinafter "Relator" or "HELLEN') brings this

action on behalf of the United States of America, the State of Florida, the State of illinois.

the State of Indiana. the State of Louisiana, the State of New York, the State of Georgia,

and the State of Hawaii. against WELLCARE HEALTH PLANS, INC., (hereinafter "WELLCARE"), WELLCARE OF FLORIDA INC., formerly known as WellCare HMO; Inc., (hereinafter "WELLCARE OF FLORIDA"), HRA,_LTHEASE OF FLORIDA, INC., (hereinafter "HEALTHEASE"), HARMONY BEHAVIORAL HEALTH, INC., (hereinafter "HARMONY"). HEALTHEASE HEALTH PLANS OF FLORIDA, INC., ~\1ERIGROUP CORPORATION and AMERIGROUP FLORIDA, INC., (collectively "AMERIGROUP"), VALUEOPTIONS, INC. and FLORIDA HEALTH PARTNERS, INC, and . FLORIDA BEHAVIORAL HEALTH, INC., (collectively "V ALUEOPTIONS"), HUMANA MEDICAL PLAN, INC., d/b/a HUMANA FAMILY

.. "." .. (h~reirtafie.L~~~Hll:tYL~4:')J~Jl~IJ.]3I) .BEAkT1L. GB:Q~?Llli~~ __ ?Q~. .. VNIT§R~· ..

HEALTHCARE SERVICES, INC., d/b/a AMERICHOICE ("collectively "UNITED HEALTHCARE") and VISTA HEALTHPLAN, INC. d/b/a BUENA VISTA (hereinafter "VISTA") for treble damages and civil penalties for the Defendants" violations of the False Claims Act, 31 U.S.C. § 3729 et seq; the Florida False Claims Act, Florida Statutes 68.081 et seq; the illinois Whistleblower Reward and Protection Act, Illinois Compiled Statutes Chapter 740, Act 175 et seq.; the Indiana False Claims and Whlstleblower Protection Act; Indiana Code 5-11-5.5, et seq; the Louisiana Medical Assistance Programs Integrity Statute, Louisiana Revised Statutes § 437.13 et seq; the New York False Claims Act. New York State Finance Law § 187 et. seq; the Georgia False Medicaid Claims Act, Code of Georgia § 49-4-168~ andthe Hawaii False Claims Act, 36 Hawaii Revised Statutes 661-21 et seq.

2. 'The False Claims Act, 31 U.S.C: S. 3729, et seq., provides that any person

who knowingly submits or causes to be submitted a false or fraudulent claim to the

2

Government for payment or approval is liable for a civil penalty of up to $11,000 for each such claim submitted or paid, plus three times the amount of damages sustained by the Government. Liability attaches both when a defendant knowingly seeks payment that is unwarranted from the Government; and when false records or statements are knowingly created or caused to be used to conceal, avoid or decrease an obligation to pay or transmit money to the Government. The Act allows any person having information regarding a false or fraudulent claim against the Government to bring an action for himself (the "Relator") and for the Government and to share in any recovery by the Government. The Complaint is filed under seal for 60 days (without service on the

._.",Ji~f<;114~mJ~" __ .Qwing_lkL~Lp~rio~D __ t_Q_~naQk Jg_~_ G.9.v~@!ll~J;!.~; (a)_t() c2g_4~9J its"~~~~ _ investigation without the defendants' knowledge; and (b) to determine whether to join the action.

3. As required by the False Claims Act, 31 U.s.C. §3730(b)(2), the Relator

has provided to the Attorney General of the United States, to the United States Attorney for the Middle District of Florida. and to the Attorney Generals of Florida, Illinois, Indiana; Louisiana, New York. Georgia, and Hawaii, a statement of all material evidence and information related to the Complaint. . This disclosure statement is supported by material evidence known to the Relator establishing the existence of Defendants' false claims. Because the disclosure statement includes attorney-client communication and work product of Relator's attorneys, and is submitted to the Attorney General, to the United States Attorney. and to the various state attorneys general in their capacity as potential co-counsel in the litigation, the Relator understands this disclosure to be confidential.

3

Jurisdiction and Venue

4. This action arises under the False Claims Act, 31 U.S.C. § 3729 et seq.

This Court has jurisdiction over this case pursuant to 28 U;S.C. § 1345, 28 U.S.C. § 1331,31 U.S.C. § 3732 (a) and § 3730(b), and 28 V.S.c, § 1367.

5. Venue is proper in this District pursuant to 31 U.S.C. § 3732(a), because

the acts proscribed by 31 Ll.S'C. § 3729 et seq. and complained of herein took place in Hillsborough County within this District, and is also proper pursuant to 28 U.S.c. §§1391(b) and (c) because at all relevant times Defendants transacted business in this District.

6. Relator SEAN J. HELLEIN worked for Defendant WELLCARE as a

Senior Financial Analyst. He was employed by WELLCARE from November 2002 through October 2007. Relator HELLEW brings this action upon his direct, independent, and personal knowledge.

7. Defendant WELLCARB is a Delaware corporation licensed to operate as a

health maintenance organization with its principal place of business in Tampa, Florida. tn addition to FlorIda, WELLCARE conducts business in New York, Connecticut, illinois, Indiana, Louisiana, Georgia and Hawaii. Medicaid programs administered by those states pay WELLCARE and the other named Defendants. who are related entities, monthly premium or capitation for managing the cost of providing medical services to Defendants' members, who are Medicaid beneficiaries. Virtually one hundred (100) percent of WELLCARE's revenues are derived from the Government, and the above named states through Medicaid and Medicare contracts.

4

8. Defendant HARMONY was the behavioral health department of

Defendant WELLCARE until its incorporation in 2005.

9. Defendants HEALTHEASE OF FLORIDA, INC., and HEALTHEASE

HEALTH PLANS OF FLORIDA, INC., are wholly owned and operated by WELLCARE

and provide similar health management services in Florida under Medicaid contracts.

10. Defendant WELLCARE OF FLORIDA is wholly owned and operated by

WELLCARE and was formerly known as Well Care HMO, Inc.

11. Defendant AMERIGROUP is a Delaware corporation with its principal

place of business in Virginia Beach, Virginia. AMERIGROUP operates a health

_ _ _ __~1_~~~_eE.~~_~_()E~~~~ti7?_~ i~_~~_f?:~~~~a$_~~_t.e.~_~~!_)\~~?~~~~ ~~~_~~,~<;. I..ik~ ~

WELLCARE, defendant AMERIGROUP derives substantially all of its revenues from

the government and from state governments, through state programs for poor people. In

Florida. it- is paid fixed premiums by Florida Medicaid and other, similar programs in

exchange for managing the costs of medical services provided to poor persons.

12. Defendant V ALUEOPTIONS is a national managed care company based

in Norfolk, Virginia that specializes in management of mental health and chemical

dependency- diagnoses. V ALUEOPTIONS delivers behavioral health services to

Medicaid recipients in Florida through FLORIDA HEALTH PAR1NERS, INC., which is

- -

owned by V ALUEOPTIONS and FLORIDA BEHAVIORAL HEALTH INC., a group of

local mental health and substance abuse providers.

13. Some of the same persons have held senior executive positions in both

defendant WELLCARE and defendants AMERIGROUP and V ALUEOPTIONS. For

5

example, M.T. Sattaur, formerly WELLCARE's President of FLorida Operations, was

formerly CEO of defendant AMERIGROUP.

14.

Although

defendants

WELLCARE.

AMERlGROUP

and

V ALUEOPTIONS compete for business in Florida and elsewhere, they also cooperate

with each other by consciously making the same false claims against Florida Medicaid in

order to reduce the likelihood that such false claims are detected because of discrepancies

with respect to costs of the same services as reported to Medicaid by each company.

15. Defendants HlJMANA tvrnDICAL PLAN, INC., d/b/a HUMANA

FAMILY, UNITED HBALTHCARE OF FLORIDA, INC., and its related entities

AMERICHOICE, and VISTA HEALTHPLAN. INC., d/b/a BUENA VISTA operate

HMOs for Florida Medicaid recipients.

16. Defendant TODD FARHA was the Chief Executive Officer (CEO) of

WEI:LCARE HEALTH PLANS, Inc. during all relevant times.

17. Defendant PAUL BEHRENS was the Chief Financial Officer (CPO) of

WELLCARE HEALTH PLANS, Inc. during all relevant times,

, 18. Defendant TIIADDEUS BEREDA Y was the Senior Vice President.

Secretary and General Counsel of WELLCARE HEALTH PLANS. Inc. during all

relevant times.

General Allegations

19. Medicaid is a cooperative" federal-state" welfare program that pays for

providing medical assistance to needy people. Although Medicaid is managed by

participating states, in Florida more than fifty-five (55) percent of the cost of the Florida

6

Medicaid program is currently paid by the United States Government and approximately forty-five (45) percent is funded by the State of Florida. Medicaid programs in New York, Indiana. illinois, Connecticut, Louisiana, Georgia and Hawaii are funded through similar cost sharing arrangements, although proportions of federal-state funding vary from state to state.

20. Title 42 U.S:C. § 1320a-7b(a)(3) makes it a federal crime for anyone who

has "knowledge of the occurrence of any event affecting ... his initial or continued right" to any benefit or payment under a federal health care program to "conceal or fail to disclose such event with an intent fraudulently to secure such benefit or payment in a

gr~ater.:.~mUl.t.,QLq1JfU11ity.Jhillli~.Q.Ae..!, .~ _. _ _ _ .. _ ,_. _ .. _

21. The False Claims Act, 31 U.S.C. § 3729(a)(7), prohibits knowingly

making. using, or causing to be made or used, "a false record or statement to conceal, avoid or decrease an obligation to payor transmit money or property to the Government."

22. Health management or health maintenance organizations (HM.Os) that

contract with the Medicaid and Medicare programs and who discover material errors or omissions in claims or supporting documents that result in overpayments, or that

. erroneously decrease or avoid their obligation to payor transmit money to the Government or to a state. are required to timely disclose those errors or omissions to Medicaid or Medicare. Contractors are not free silently to accept windfalls from such errors, much less to exploit them by continuing knowingly to avoid repayment obligations, and by taking steps to conceal errors or omissions.

23. The Florida False Claims Act, Florida Statute § 68.082(2)(g), prohibits

knowingly making, using. or causing to be made or used, "a false record or statement to

7

conceal. avoid or decrease an obligation to payor transmit money or property to an

agency."

24. The illinois Whistleblower Reward and Protection Act, llIinois Compiled

Statutes,' Chapter 740, Act 175/3. § 3(a)(7), prohibits knowingly making; using. or

causing to be made or used, "a false record or statement to conceal, avoid or decrease an

obligation to payor transmit money or property to the State,"

25. The Louisiana Medical Assistance Programs Integrity Law, Louisiana

Revised Statutes § 438.3(C), provides that "[n]o person shan conspire to defraud, or

attempt to defraud the medical assistance programs through misrepresentation ... " .

5-11-5.S(B)(6) prohibits knowingly or intentionally making or using "a false record or

statement to avoid an obligation to payor transmit property to the State."

27. The New York State False Claims Act, Finance Law § 189(1)(g), prohibits

knowingly making. using, or causing to be made or used, "a false record or statement to

conceal, avoid or decrease an obligation to payor transmit money or property to the State

or a local government."

28. The Georgia False Medicaid Claims Act § 49A.168.1(a)(7), prohibits

knowingly making, using, or causing to be made or used, "a false record or statement to

conceal, avoid, or decrease an obligation to pay, repay or transmit money or property to

the State of Georgia."

29. The Hawaii False Claims Act, 36 Hawaii Revised Statutes 661-21(f),

prohibits knowingly making, using, or causing to be made or used, "a false record or

8

statement to conceal, avoid, or decrease an obligation to pay 'or transmit money or

property to the State."

COUNT I:

Reverse False Claims In Violation of 31 U.S.C. § 3729(a)(7); Florida Statute § 68.082(Z)(g), and Illinois Compiled Statutes, Chapter 740. Act 175/3, § 3(a)(7)

30. Relator realleges and incorporates by reference paragraphs 1 through 29 ..

31. Defendant WELLCARE contracts with the Florida Medicaid program to

manage the costs of providing outpatient behavioral health services, including Targeted

Case Management and Community Mental Health, to Medicaid beneficiaries.

32. Paragraph 60.3,6 of WELLCARE's contract with Florida Medicaid

. r61htirigtb~Tittg;;tetiCci~e"Martagetiient'~ndCo'm"munity "MenfhCHeaith""s-ervlcefprovldes " .

that «SO percent of the capitation paid to the plan shall be expended for the provision of

behavioral health care services. In the event the plan expends less than 80 percent of the

capitation the difference shall be returned to the agency no later than May 1 of each year." The foregoing provision mirrors language in Florida Statutes, § 409.912(3)(b).

WELLCARE's contract with the Illinois Medicaid program contained a similar refund

obligation and/or an off-setting deduction from future premium payment.

33. Prior to entering into the contract described above, Defendant

WELLCARE and Florida Medicaid had entered into a comprehensive cost management

agreement covering a range of in-patient, out-patient I emergency room, and pharmacy

services, and specifically also including behavioral health services rendered for patients

in hospitals, nursing homes, and similar in-patient settings.

34. . Defendant WELLCARE's pre-existing contract differed significantly from

the contract for Targeted Case Management and Community Mental Health services in

9

that the pre-existing contract did not contain an obligation to repay Medicaid in the event

capitation expended for services was lower than a targeted percentage.

35. Although Paragraph 60.3.6, above, refers to "behavioral health care

. . :

services," the parties well understood that its coverage was necessarily limited to

Targeted Case Management and Community Mental Health services because in-patient,

out-patient, emergency room, and pharmacy services were already covered under

WELLCARE's pre-existing comprehensive Medicaid contract.

36. As early as 2002, and continuing thereafter at least until the date of this

Amended Complaint, Defendant WELLCARE knowingly and intentionally shifted and

. misallocated costs pertaining to the pre-existing Medicaid contract, by fraudulently and

": .. "L~' __ .---- __ ._ ... , .. '._ .. : . __ .. '_._~.-- ::_, .. .--:_.c,,~ _' . .--r-;:;'-;: :>-._.""~.' ,.~'c .c._~~_. -_- - " :--~-~:. __ .. -:. ':.~. '_'_~".. L __ _ ~~~~_ N.:...... ._WYO

wrongfully categorizing expenses covered under the pre-existing contract as expenses

covered under the Targeted Case Management and Community Mental Health services

contract in order to reduce and avoid its premium repayment obligations.

37. In or about June 2004, WellCare repaid Florida Medicaid approximately

$6 million in Targeted Case. Management and Community Mental Health services ..

premium pertaining to years 2002 - 2003. Financial Analyst Greg West told Relator that

"Todd [Farha] was frustrated that the Health Services team lacked the foresight to offset

the 2002-2003 payback." CEO TODD FARHA then directed Dr. Bill Kale, then head of

WellCare's behavioral health department, to come up with a plan under which WellCare

could significantly reduce or avoid future Medicaid repayment obligations for Targeted

Case Management and Community Mental Health services.

38. Pursuant to CEO TODD FARHA's directive, Dr. Kale instructed 1v1r.

West to include specified non-related services as costs to be associated with the

10

" ~."

• ~r :.: .:

i,"-,;.

behavioral health program: Although these costs were unrelated to WellCare's Targeted

Case Management and Community Mental Health services. by falsely reporting them as

program expenses, Well Care was able to retain significantly more Medicaid premium

than its legitimate 20% profit. TODD FARHA reviewed and approved Dr. Kale's and

Mr. West's false cost add-ens. As a result of these fraudulently allocated costs, Well Care

reduced its payback to the Florida Medicaid program for the years 2003 thru 2005 and

caused losses to the Florida Medicaid program of approximately $23 million.

39. . As shown in Exhibit 1 in 2005, WellCare received a total premium of $30

million from Florida Medicaid in order to provide Targeted Case Management and

... C9~g.l1i1:y M~m~JI;~aJtQ.s~J:_\T!.~~~ . 6£.c()~cii~g __ ~o. ~~~ ~~~t~~t. w~~h o~~~}c~.~ .. "ill. tl~~ event that Well Care expends less than 80% of the premium [$24 million] the difference

shall be returned" to Medicaid. WellCare's actual total medical costs as illustrated in

Exhibit 1 were $15 million. Therefore. WellCare owed Florida Medicaid between $9-12·

million. Yet according to Exhibit 1, WellCare was presently considering the option of

making an improper refund of only approximately $700,000.

40. Exhibit 2 is an e-mail from Greg West to Dr. Bill Kale and Director of

Medical Economics Benjamin Orris, dated March 28, 2006. It describes a "rough draft of

the AHCA payback for CY 2005; outpatient behavioral health for Medicaid." In this e-

mail, Mr. West offered three possible payback options for 2005. Under Option 1,

WellCare would pay back "$0" to Medicaid, assuming WelJCare employed the capitation

scheme involving Harmony Behavioral Health, Inc. described below. Option 2 resulted

in a payback of $11.9 million. West said this amount assumed WellCare would not

wrongfully include the $4.91 per member/per month inpatient charges «we did last year."

11

(Inpatient expense is not a legitimate Targeted Case Management and Community Mental Health expense.) West's payback Option 3 offered a $9.2 million improper compromise based on a wrongful calculation utilizing non-related expenses for 2005.

41. In April 2006, Defendant WELLCARE was erroneously informed by

AHCA that Florida Medicaid had paid WELLCARE a total premium of $24,878,587 for outpatient behavioral health services. WELLCARE~ however. knew that the true premium amount paid by AHeA was $30,310,183.

42. Although WEllCARE knew of this $5.4 million overpayment,"

WELLCARE knowingly made and used false records to conceal. avoid and decrease \Y13b~~A!~J0:\s~Q~lig<!:~jg}l !_2.p~Y:9.r_!~~s~!_I??:~~~l t?!~~ ~ori~~<tM~_di9.~~ P~?'£.l~:

43. In June 2006, Vice President of Medical Economics Peter Clay told

Financial Analyst Greg West that WELLCARE needed to maintain the same reporting method used to hide $10 million in the prior year.

44. Around June 16, 2006, CEO TODD FARHA decided to refund $1.4

million of the over $10 million due to AHCA.

45. Around April 6, 2007, Well Care fraudulently sent a payback check to the

State of Florida for approximately $1.1 million. Financial Analyst Greg West had previously calculated that the correct payback should have been approximately $14.4 million for 2006. Greg West had provided that analysis to CFO PAlJL BEHRENS and Actuarial Director Jian Yu. After receiving Greg West's analysis, Jian Yu came up with a fraudulent payback calculation methodology that reduced WellCare's 2006 payback obligation to approximately $1. 1 million.

12

. . .'

46. Documents found by Relator in the MedEconiActuarial network printer in

June 2006 show that WellCare had calculated its payback "exposure" under its Florida

Healthy Kids contract at $3,793,429 for the October 2004 - September 2005 period.

47. Defendant WELLCARE also knowingly and intentionally shifted and

misallocated costs against its Illinois Medicaid contract in a similar manner.

48. On October 31. 2006, Director of Corporate Development Dave Firdaus

asked "Why do we have so many different efforts going on to inflate costs in illinois,

why don't we just create a shell company like we do in New York and the other states to

avoid paying back the State?"

49 .... _ P9c_~~en~s_f'?u.~gby ~~l<l:~or)n the :M~~0n!Ac~uari~ ~~t':V0rk provider in June 2006 show that WELLCARE calculated its payback "exposure" under its illinois

Medicaid Contract for the Apri12005-March 2006 period as $2,704,486.

50. By misallocating costs pertaining to the pre-existing Medicaid contract,

and capitalizing on AHCA's error concerning actual premium amounts paid,

WELLCARE, TODD FARHA and PAL'J~ BEHRENS' concealed, decreased and avoided

its contractual and statutory obligation to repay and transmit money to the Government,

. and to the States of Florida and Illinois, through the Florida Medicaid Program and the

illinois Medicaid Program.

51. Due to the actions of Defendants WELLCARE, FARHA and BEHRENS,

the United States, the State of Florida and the State of illinois suffered damages and therefore are entitled to multiple damages under the Federal False Clams Act, the Florida

False Claims Act, and the Illinois Whistleblower Reward and Protection Act, to be

determined at trial, plus a civil penalty of $5,500 to $11,000 for each violation.

13

52. Based on the conduct of WELLCARE, FARHA and BEHRENS in Florida

and Illinois, Relator believes that WELLCARE shifted and misallocated costs, entered

improper capitation arrangements and concealed premium overpayments on a company-

wide basis to avoid or minimize payback of refund obligations in other states.

COU~"T II:

Reverse False Claims and False Claims Conspiracy in Violation of 31 U.S.C. § 3729(a}(3) and (a)(7) and Florida Statute § 68.082(2)(c) and (2)(g)

53. Relator realleges and incorporates by reference paragraphs 1 through 29.

54. Florida Medicaid funds the Florida Healthy Kids Corporation ("11ealthy

Kids" or "FHKC') which has been empowered by the Florida Legislature pursuant to §

._ • +.h .~. L. u", •• , •• ~ •• ,,_" _ _ '._. ~. _.~,.u ~ ~,~ UL_ • ", •••• ,' .n •• r , -~~ " ' , ._", •• •

624.91(4)(b}(12)~ Florida Statutes, to enter into contracts with health maintenance

organizations to provide comprehensive health insurance coverage, principally to poor

children who do not qualify under other state Medicaid programs.

55. On or about October 1,2003, Healthy Kids entered into a medical services

contract with Defendant WELLCARE and its wholly owned subsidiaries,

... HEAL TREASE and WELLCARE OF FLORIDA. This contract provided for Healthy

Kids to utilize HEALTHEASE's provider network to deliver comprehensive health care

services to all eligible children in Citrus, Duval, Escambia, Highlands, Martin, Putnam

and Wakulla Counties; the provider network of Defendant WELLCARE OF FLORIDA

was to be utilized for Broward, Miami-Dade, Hernando, Hillsborough, Lee, Orange;

Osceola, Palm Beach, Pinellas and Seminole Counties. This medical services contract

has been renewed and remained in effect as of the original filing date of this Complaint.

. 56. Paragraph ill of the October 2003 Medical Services Contract, attached as

Exhibit 3, provides as follows:

14

"In the event that the actual experience is less than 85 percent, in the aggregate for both Well Care and HealthEase. .HEAL TH PLAN shall pay to FHKC onehalf of the difference.

HEALTH PL.At~ shall annually provide FHKC with an aggregate experience report no later than March 1 st for the prior calendar year. If any payments are due under this provision, HEALTH PLAN shall forward such payment with its written notification. HEALTH PLAN may be subject to audit or verification by FI-IKC or its designated agents.

FHKC is not under any further obligation if the actual loss ratio exceeds 85%

HEALTH PLfu~S effective dates: October 1, 2003 - September 30, 2005."

2004 and continuing thereafter until the date of this Complaint, Defendants WELLCARE

OF FLORIDA and HEALTHEASE knowingly and intentionally conspired to shift and

misallocate and shifted and misallocated costs incurred under other Medicaid contracts,

fraudulently charging such expenditures to their medical services contract with Healthy

Kids, and thereby concealed. avoided and decreased WELLCARE OF FLORIDA'S and

HEALTHEASE'S contractual obligation to repay money to the Government and to the

State of Florida.

58. Documents found by Relator in the MedEconl Actuarial network printer in

June 2006 show that WELLCARE calculated its payback "exposure" under its Florida

Healthy Kids contracts for the October 2004-September 2005 period as $3,793,429.

59. Due to the actions of WELLCARE OF FLORIDA and HEALTHEASE,

the United States and the State of Florida suffered damages and therefore are entitled to

15

multiple damages under the Federal False Claims Act and the Florida False Claims Act,

to be determined at trial, plus a civil penalty of $5,500 to $11,000 for each violation.

60. Based on WELLCARE'S conduct in Florida and Illinois, Relator believes

that WELLCARB shifted and rnisallocated costs and entered improper capitation

arrangements on a company-wide basis to avoid or minimize payback of refund

obligations in other states.

COUNT III:

Reverse False Claims and False Oaims Conspiracy In Violation of 31 U.S.c. §§ 3729(a)(3) and (a)f7) and Florida Statute § 68.083(2)(c) and (21(g2

61. Relator realleges and incorporates by reference paragraphs 1 through 29.

Defendant HARMONY. Prior to its incorporation, HARMONY was the behavioral

health department of WELLCARE.

63. Defendant WELLCARE's management team set up a new system of

accounts whereby the costs of WELLCARE'S behavioral. health services contract with .

. Florida Medicaid would be captitated to HARMONY at the rate of eighty-five (85)

percent, regardless of how much money V\as actually expended for behavioral health care

services.

64. By conspiring to set up a system of false cost accounting, Defendants

WELLCARE and HARMONY intended to conceal, decrease, and avoid WELLCARE'S

contractual and statutory obligation to pay money to the Government and to the State of

Florida because WELLCARE'S Targeted Case Management and Community Mental

Health services costs would be reported falsely as exceeding eighty (80) percent.

16

65. In furtherance of the above conspiracy, on or about March 28, 2006,

members of WELLCARE'S management team directed Financial Analyst Greg West to

prepare a document showing a repayment obligation of zero dollars if WELLCARB

arbitrarily capitated all behavioral health costs to HARMOl\i'Y at eighty-five (85) percent Exhibit 4.

66. In April or early May 2006, CFO PAUL BEHRENS asked Internal Audit

Manager Christopher Price to stay clear of auditing HARMONY.

67. On June 29, 2006, Financial Analyst Greg West calculated that

WellCare's true payback obligation of $9,219,561 would be reduced to $1,440,449 due to

the arbitrary capitation to HARMONY. Exhibit 5.

• .._ •• _,._ •• ,_, __ H'~"" "."., ._ •••• -~, "~_r· : __ ' _ •• _, __ •. __ "" __ ,-'r'

68. In March 2007, Senior Director of Medical Economics Jian YU told

Relator and Senior Director of Harmony Behavioral Health Kerri Fritsch, "Each year we

come up with a different method for avoiding payback, I'm going to create a standard

method that we're going to use going forward to submit the pay back."

69, Due to the actions of Defendants WELLCARE and HARMONY, the

United States and the State of Florida suffered damages and therefore are entitled to

multiple damages under the Federal False Claims Act and the Florida False Claims Act, to be determined at trial. plus a civil penalty of $5,500 to $11,000 for each violation •

. 70. Based on \VEILCARE'S conduct in Florida and illinois, Relator believes

that WELLCARE shifted and misallocated costs and entered improper capitation

arrangements on a company-wide basis to avoid or minimize payback of refund

obligations in other states.

17

COUNT IV:

Reverse False Claims and False Claims Conspiracy in Violation

of 31 U.S.C. § 3729(a)(3) and (a)(7) and Florida Statute §§ 68.082(2)(c) and (2)(g) and illinois Compiled Statutes Chapter 740. Art. 175 § 3(a)(3) and 3(a)(7) and New York State False Claims Act, Finance Law § 189(1)(c) and (1)(g)

71. Relator reaIleges and incorporates by reference paragraphs 1 through 29.

72. Defendant WELLCARE markets a variety of health care cost management

products funded by the Government and the State of Florida through capitation paid by

Florida Medicaid. WELLCARE'S profit is generally determined by the difference

between the capitation it receives from Medicaid and Medicare and the amounts

providers charge WELLCARB for rendering medical services to its members.

73: As described in Count Il, WELLCARE'S HelIthyKids contract contains a

monetary repayment obligation to Florida Medicaid; the amount of which decreases as

costs increase.

74. Beginning 1U 2004 and continuing thereafter until the date of this

Amended Complaint, Defendants WELLCARE and FARHA conspi.red and continues to

conspire with hospitals and physicians in Florida, New York, Connecticut and other

states to fraudulently manipulate the terms and conditions of contracts for multiple,

WELLCARE products to increase costs to Healthy Kids, while lowering expenses for

other products that have no repayment obligations; and to prepay providers for medical

expenses in future years in order to inflate current year medical costs and thereby (1)

avoid any payback or refund obligations, and (2) justify premium increases.

75. As a result of these agreements, WELLCARE fraudulently over reports its

Healthy Kids costs and thereby conceals, reduces, and avoids its contractual obligation to

pay money to the Government and to the State of Florida through Florida Medicaid.

18

~ 76. :rn late . November or early December 2005j· Defendant WELtCARE

negotiated a: number of contracts, including contracts for the Healthy Kids program, with South Broward Hospital District ("South Broward"),which operates a number of hospitals in Broward County. Florida.

77. IIi or about late November or early December 2005, WELLCARE and South Broward conspired to facilitate the concealment. reduction, and avoidance by WELLCARE of its obligation to pay money to the Government and the State of Florida by fraudulently increasing WELLCARE'S costs for Healthy Kids Medicaid beneficiaries by 31.6 percent and reducing costs for other contracts that did not contain a repayment oblig~tion ..

78. In a December 7. 2005 email. WELLC.A..RE CEO TODD FARHA

admitted that WELLCARE'S contract with South Broward "was designed to push us up to the 80% give-back point with the state."

79. The above-described contracts between Defendant WELLCARE and

South Broward are an example of a fraudulent practice that has occurred in other instances where WELLCARE negotiated with a single provider to sell a number of different products, including Healthy Kids.

80. On or about December 7, 2005, in furtherance of the above u~lawful

agreement, Peter Clay, WellCare's Vice President of Medical Economics, advised the . Relator that he should not discuss high costs in the Healthy Kids contracts signed with South Broward because this was a "politically sensitive" topic and "part of our business

strategy."

19

81. On or about September 22 or 27, 2006. Relator met with Director of

Florida Finance David Herndon and Florida Finance Business Analyst Jigar Desai. During this meeting, Herndon mentioned that there is a new push from "senior management II to pay money to hospitals this year in order to incur additional expenses offsetting future expenses. Later that day, Florida Finance Director JoJo Young told Relator that TODD FARHA was pushing out a strategy in which WellCare would prepay for medical expenses through locking in expenses now in exchange for offsetting future expenses. Exhibit 6. TIlls tactic of costs swapping across years because WellCare was too profitable was also discussed on September 28; 2006 between Relator and Senior Medic~"E:~o_n?lI1ics.~onsu!t~t KevID. :N!.annin~, c0l!cer~il1g_~0l?:~ecticut, New York, and elsewhere. [d.

82. Paying inflated amounts to hospitals and providers in the current year with

the intention and agreement to re-capture these inflated payments in later years was a

. scheme that would strategically and unnecessarily inflate WellCare's current expenses in order to (1) make WellCare appear less profitable to regulators, (2) allow Well Care to retain already paid premiums (avoid refunds), and (3) help WellCare argue for increases in future premium rates.

83. Relator knows that WELLCARE contracted with hospitals in Illinois to

shift costs from the Medicare program to the illinois Medicaid program in order to avoid a Medicaid refund obligation.

84. Relator was informed that WELLCARE was contracting with Mount Sinai

. Hospital in illinois to shift costs from Medicare to Medicaid in order to avoid a Medicaid refund obligation.

20

85. Due to the actions of Defendants WELLCARE and FARRA.., the United

States, the State of Florida, the State of illinois, the State of New York, the State of

Connecticut, and other states suffered damages and therefore are entitled to multiple

damages under the Federal False Claims Act, the Florida False Claims Act, the Illinois

Whistleblower Reward and Protection Act and the New York State False Claims Act to

be determined at trial, plus a civil penalty of $5,500 to $11,000 for each violation.

86. Based on WELLCARE'S conduct in Florida, illinois, New York and

Connecticut, Relator believes that WELLCARE shifted and misallocated costs, prepaid

providers for medical expenses in future years, and entered improper capitation

obligations and justify premium increases in other states.

COUNT V:

Knowingly Making or Using False Records to Get False or Ifraudulent Claims Paid or Apgroved in Violation of 31 U.S.C. § 3729(a)(2); Florida Statute § 68.082(2)(b); Louisiana Revised Statutes * 438.3(B): Indiana Code 5·11~5.5~2(b)(2): Illinois Compiled Statutes Chapter 740, Art. 175, § 3(a)(2); New York City False Claims Act, § 7·803(2); New York State False Claims Act, Finance Law § 189(1)(b); Code of Georgia 49·4-168.1(a)(2): and 36 Hawaii Revised Statutes 661-21(1).

87. Relator realleges and incorporates by reference paragraphs 1 through 29.

88. Pursuant to the Medicare Provider Reimbursement Manual, an HMO may

undertake self-insurance arrangements through captive re-insurers, but premiums paid to

such captive companies are not recognized as a reimbursable cost if they exceed the cost

of comparable commercial reinsurance premiums.

89, WELLCARE, on a company-wide basis, purchases reinsurance to cover

unexpectedly large claims. For claims arising out of New York's Medicare and Medicaid

21

programs, . including Child HealthPlus and Family Healthf'Ius, WELLCARE has

traditionally utilized a private unrelated insurance company.

90. In 2005, WELLCARE created a wholly-owned Cayman Islands

reinsurance subsidiary. WELLCARE pays reinsurance premiums to this subsidiary at a

rate that is nearly five times higher than the rate it pays its unrelated re-insurers,

WELLCARE reportedly recaptures the inflated reinsurance premiums paid to its wholly-

owned subsidiary by falsely characterizing such payments as derived from unrelated

activities.

91. In April 2006, Financial Analyst Greg West informed Relator that

WELLCARE'S reinsurance costs in New York rose fromupproximately $Q,6Q P~I

... _ . ... ..' ~ _ ... ... . -~. -". ~ -, ., .

member per month to approximately $3.00 per member per month for nearly 100,000·

WELLCARE members.

92. On June 8. 2006, Greg West attended a meeting in which a change in the

reinsurance rate in Connecticut from $0.80 per member per month to $3,83 per member

per month was discussed.

93,· This manipulation allowed WELLCARE to knowingly under-report its

profit margin in New York, Connecticut, and elsewhere, and to misrepresent its costs in

negotiations with New York Medicaid, Connecticut Medicaid, other Medicaid programs,

and Medicare,' and thereby persuade New York Medicaid, Connecticut Medicaid, other

Medicaid programs, and Medicare to maintain WELLCARE's premiums at higher levels

than justified by actual costs.

94, In late April 2006, CEO TODD FARHA said he hoped "New York will

not realize we are sending reinsurance dollars to our own subsidiary."

95. Due to the false profit margin records made and used by Defendants

WELLCARE and FARHA during WELLCARE's premium negotiations, the United

States and the States of Florida, Louisiana, Indiana, Illinois, New York, and Georgia, and

the City of New York suffered damages and therefore are entitled to multiple damages

under the Federal False Claims Act, the Florida False Claims Act, the illinois

Whistleblower Reward and Protection Act, the Louisiana Medical Assistance Programs

Integrity Law, the Indiana False Claims and Whistleblower Protection Act, the New York

City False Claims Act, the New York State False Claims Act, the Georgia False Medicaid

Claims Act, and the Hawaii False Claims Act, to be determined at trial, plus a civil

penalty 0r~5,50.9t.? $11,OqO for each v~olati_on."

96. Based on WELLCARE'S conduct described above, Relator believes that

WELLCARE improperly manipulated reinsurance on a company-wide basis and in other

states in order to avoid or minimize payback of contractual refund obligations and to

justify premium increases.

COUNT VI:

Reverse False Claims In Violation of 31 U.S.C. § 3729fa)(7) and Florida Statute § 68.082(2)(g)

97. Relator realleges and incorporates by reference paragraphs 1 through 29.

98. Florida Medicaid pays WELLCARE premiums that vary by the ages of

Medicaid beneficiaries, and also by Florida's AHeA regions. For example, in AHCA

Region 1, WELLCARE receives at least $4,800 a month for an SSI infant during months

zero, one, and two of that infant's life. For months three through eleven, however, the

monthly SSI Medicaid premium is reduced to $1,500, since the cost of catastrophic birth

injuries and defects is usually incurred in the first three months of life.

23

99. During July 1, 2005 through September 2005, WELLCARE,

AlvrERIGROUP, HUMANA. UNITED HEALTHCARE, and VISTA received erroneous

overpayments for SSI and other Medicaid infant beneficiaries because of an error in birth

cohort data: More specifically, Medicaid mistakenly paid these defendants higher month

zero, one, and two premium rates for members actually in the lower premium rate third

through eleventh month age bands. When overpayments began to be received, WellCare

took note of the State's error. Rather than immediately notif-y Medicaid, however,

Well Care wrongfully retained the overpayment funds as an "accrual" in its accounting

system in case Medicaid should detect the error. This accrual exceeded $21 million

dollars. WellCare's knowing retention of overpayments for SST is one example of a

" .,.. •••• " ~ • ~. ••• "~. _. ~- ."- • ,,_ • • • I'" ~.. .-

reverse false claim that occurs across Medicaid "rate cells" in other Florida AHCA

regions.

100. Based on AHCA statistics, WellCare had 54.6 percent of Florida Medicaid

HMO members under the age of one in July-September 2005. The· following other

Hl\10s had these percentages of the same population of members under one year of age

in that time period: Amerigroup Florida had 17.8 percent; United Healthcare had 9.8

percent.. Humana had 5.6 percent, and Buena Vista had 4.5 percent. Since this

overpayment was made to multiple providers treating members under one year of age,

since Wel1Care had 54.6 percent of this population and since WellCare had calculated its

overpayment as $23.6 million, the estimated overpayments for the other providers based

on their market share percentages are $7,684,602 for Amerigroup Florida; $4,253,420 for

United Healthcare; $2,440,625 for Humana; and $1,940,717 for Vista d/b/a Buena Vista.

24

10 1. In a staff meeting attended by Relator on May 4. 2006,Director of

Medical Economics Ben Orris discussed with Relator an existing accrual on WeHCare's

financial books since July of 2005 evidencing. these overpayments. During their

discussion, Relator made a remark to Ben Orris concerning the wrongfulness of retaining

these funds and of related WellCare decisions. Mr. Orris said WellCare made a series of

unethical decisions. "particularly in the case of Dr. Kale's Behavioral Health payback."

102. Medicaid has a premium rate structure based on age and sex of

beneficiaries. For months prior to July 2005, WellCare reports "actual" premium

amounts received from the State of Florida. However from July 2005 forward, WellCare

State, but does not disclose the actual amount that WellCare received. WeliCare is

specifically utilizing this cbange in reporting methodology in order conceal the State of

Florida's $23.6 million dollar overpayment. During an August 22, 2006 meeting. CPO

Paul Behrens specifically stated "that [overpayment} is forthe State to figure out and we

[W eHCare] will never report it on our financial statements."

103. Although these defendants realized the extent of the above overpayments

. .

which, as of the date of this Complaint total approximately $23.6 million to WELLCARE

alone, they have intentionally declined to notify Florida Medicaid of the erroneous

overpayments and have instead wrongfully retained the overpayments in violation of

their contractual obligation to return overpayments to Florida Medicaid.

104. Due to the actions of Defendants WELLCARB. AMERIGROUP,

HUMANA, l.lNITED HEALTHCARE, and VISTA, the United States and the State of

Florida suffered damages and therefore are entitled to multiple damages under the

25

Federal False Claims Act and the Florida False Claims Act, to be determined at trial, plus

a civil penalty of $5,500 to $11,000 for each violation.

105. Based on WELLCARE'S conduct, Relator believes that WELLCARB·

concealed overpayments made due to data errors on a company-wide basis.

COUNT VII:

KnowingJy Making or Using False Records to Get False or Fraudulent Claims Paid or Approved in Violation of 31 U.S.C. § 3729(3)(2). Florida Statute § 68.082(2){bl;, and Indiana Code 5-11-5.5.2(b)(2)

106. Relator realleges and incorporates by reference paragraphs 1 through 29.

107. Defendant WELLCl\RE markets a variety of health care management

products .. funded by the .lJ~~t~~. St.~testl!l:c! various states through capitations paid by various state Medicaid programs. WELLCARE'S profit on its Medicaid products is

generally determined by the difference between the capitation it receives from these

Medicaid programs and the amounts providers charge. VlElLCARE for rendering

medical services to its members.

108. Beginning in 2005 and continuing thereafter until the date of this

Amended Complaint. Defendant WELLCARE fraudulently inflated and over-reported

corporate completion factors to the Florida and Indiana Medicaid programs, including but

not limited to lBNR (incurred but not recognized) charges, in order to obtain premium

increases from those programs to which WELLCARE would otherwise not have been

entitled and would not have received.

109, In July 2006, Vice President of Health Services/Operations Randy

Zomerand, the head of WELLCARE'S Indiana region, complained that corporate

completion factors were highly inflated.

26

110. In July 2006, Vice President of Medical Economics Peter Clay said that

CFO PAUL BEHRENS had instructed that IBNR charges were not to be analyzed or

questioned.

.. .

. .

111. On July 10, 2006, Director of Florida Finance David Herndon told Relator

that WELLCARE was making too much money in Florida and was using completion

factors to hide WELLCARE'S true earnings.

112. On August 17,2006, Relator was informed that Director Jian Yu said she

was not allowed to send documents relating to IBNR charges by email. Ms. Yu also said

that all calculations concerning the inflated IBNR rates were being done on paper and

were being stored in her figng cabinet,

113. Due to the false and inflated corporate completion factor documents made

and used by Defendants WELLCARE and BEHRENS during WELLCARE's premium

negotiations. the United States, the State of Florida, and the State of Indiana suffered

damages and therefore. are entitled to multiple damages under the Federal False Claims

Act, the Florida False Claims Act, and. the Indiana False Claims and Whistleblower

Protection Act, to be determined at trial, plus a civil penalty of $5,500 to $11,000 for

each violation.

114. Based 011 WELLCARE'S conduct in Florida and Indiana, Relator believes

that WELLCARE manipulated corporate completion factors on a company-wise basis.

COUNTVill:

Reverse False Claims in Violation of 31 U.S.C. § 3729(a)(7) and Florida Statute § 68.082(2)(g}

115. Relator realleges and incorporates by reference paragraphs 1 through 29.

27

116. As of August 2006j Defendant WELLCARB was receiving overpayments totaling $2 million per year from the Florida Medicaid program as the result of mistakes

made in premium coding which did not match the contractually agreed upon rate.

117.· On August 14~ 2006, Relator attended. a meeting at which Director of

Florida Finance David Herndon said that Florida Medicaid was overpaying WELLCARE

$2 million annually because of a mistake in premium coding.

118. Although WELLCARE knew of these overpayments, it knowingly made

and used false records and statements to conceal, avoid and decrease WELLCARE'S

contractual obligation to payor transmit overpayments to the Florida Medicaid Program.

119. Due to Defendant WELLCARE'S actions, the United States and the State

of Florida suffered damages and therefore are entitled to multiple damages under the

, ,,~>c~.> •

Federal False Claims Act and the Florida False Claims Act, to be determined at trial, plus

a civil penalty of $5,500 to $11,000 for each violation.

120. Based on WELLCARE'S conduct, Relator believes that WELLCARE

concealed overpayments made due to premium coding mistakes on a company-wide

basis.

CODNrIX:

False Claims and Reverse False Claims in Violation of 31 U.S.C. §§ 3729(a)(1) and (a){7); and New York State False Claims Act. Finance Law ~ 189(1)(3), (l)(b) and

.ill(g2

121. Relator realleges and incorporates by reference paragraphs 1 through 29.

122. As of January 2006~ Defendant WELLCARE had over billed the New

York Medicaid program by $3 million in premiums because WELLCARE's data

28

submissions to New York State falsely overstated the number of members in its Family

HealthPlus program.

123. On August 14, 2006, Financial Analyst Greg West told Relator that CFO

PAUL BEHRENS had said in a morning meeting that WELLCARE over billed New

York $3 million in premiums because WELLCARE'S date submissions to New York had

falsely infl!;1Jed its Family HealthPlus membership.

124. Although WELLCARE knew of these overpayments, it knowingly made

and. used false records and statements to conceal. avoid and decrease WELLCARE'S

contractual obligation to payor transmit overpayments to the New York Medicaid

Program.

125. Due to the actions of Defendants WELLCARE and BEHRENS, the

United States and the State of New York suffered damages and therefore are entitled to

multiple damages under the Federal False Claims Act and the New York State False

. Claims Act to be determined at trial. plus a civil penalty of $5,500 to $11,000 for each

violation.

126. Based on WELLCARE'S conduct in New York, Relater believes that

WELLCARE concealed overpayments made due to overstated membership on a

company-wide basis.

COIJNTX:

Reverse False Claims in Violation of 31 U.S.C. § 3729(a){7), Florida Statute § 68.082(2)(g) and Itlinois Compiled Statutes Chapter 740. Article 175 et seg.

127. Relator realleges and incorporates by reference paragraphs 1 through 29.

29

128. Defendant WELLCARE was required by its contracts with the Florida Medicaid program and the illinois Medicaid program to refund money to those programs through payback refunds andlor through an off-setting deduction from future premium payments if WELLCARE spent less than a specified percentage of the capitation paid by those programs for health care services to those programs! members.

i 29. In 2006 and continuing thereafter. Defendant WELLCARE fraudulently increased the cost per member per month for over the counter pharmacy benefits from approximately $0.11 per month to approximately $5.00 per month in connection with the Illinois Medicaid program.

130. By fraudulently appearing to increase its costs for over the counter pharmacy benefits, WELLCARE knowingly made or used a false record or statement to conceal, avoid and decrease its contractual obligation to repay and transmit money to the Government, and to the States of Florida and illinois. through the Florida Medicaid Program, the Florida Healthy Kids Program, and the Illinois Medicaid Program.

131. Due to Defendant WELLCARE'S actions, the United States, the State of

. Florida, and the State of .Illinois, suffered damages and therefore are entitled to multiple damages under the Federal False Claims Act, the Florida False Claims Act, and the Illinois Whistleblower Reward and Protection Act, to be determined at trial. plus a civil penalty of $5,500 to $11,000 for each violation.

132. Based ·on WELLCARE'S conduct in Florida and illinois, Relator believes WEILCARE fraudulently inflated benefit costs on a company-wide basis.

30

INTRODUCTION TO COUNTS XI THROUGH XIV

133. Individuals entitled to Medicaid he~th benefits in Florida may choose either the standard fee-for-service Medicaid program, or a managed care plan arranged by a managed care organization ("MeO") su'ch as WELLCARE.

134. Medicaid pays MCOs predetermined amounts C'capitations'') for each enrolled member based on age/gender/eligibility/region categories and actuarial studies of the covered population groups. The Mea in retumarranges for enrolled memberbeneficiaries to receive medical services by contracting with a network of medical services providers who are paid by the MeO.

135. Th,e. relations!!ip~e.t\¥~~n£a.Y(l)e!lt~ t_o pr()vi9~rs __ ~f medical services versus statistically determined capitations per age/gender/eligibility/region category paid by Medicaid is known as the medical loss ratio of a health maintenance organization .

. The lower the medical loss ratio the higher the profits.

136. WELLCARE entered into a contract with Florida Medicaid to provide health services to Medicaid beneficiaries who enroll in WELLCARE'S plans. WellCare's Florida Medicaid contract was approved by the Health Care Financing Administration under the U.S. Department of Health and Human Services.

137. After entering into its Florida Medicaid contract, and continuing thereafter until and including the date of this Complaint, WELLCARE would and did undertake fraudulent marketing practices and activities, sometimes referred to as "cherry picking," aimed at reducing or eliminating from its enrollment those members whose health care costs are likely to be higher than the averages determined by actuarial and statistical age/gender/eligibility/region studies upon which Medicaid bases its capitation rates.

31

138. By engaging in "cherry picking," WELLCARE systematically disenrolls the least healthy individuals in order to extract higher profits from the Government, because its payments to medical providers are lowered while the statistically determined and fixed capitations, that Medicaid bases on "all comers" within the covered areas, remain high.

139. As a condition of receiving payment under its Medicaid managed care contract WELLCARE is required by federal regulations. and its contract. to make certain quarterly certifications of data and information. 42 c.F.R. Sees. 438.602.

140. Among the data that must be certified quarterly are all "enrollment information; enc.C?ul1!~r dataand other !nf()r~l!lti~~ reSlllir~~~ bY,t~_e .s.t~te and contained in contracts. proposals and related documents." 42 C.F.R. Sec. 438.604.

141. 42 C.F.R. Sec. 438.606 (b) provides in part that certifications "must attest. based on the best knowledge, information, and belief, as follows: (1) To the accuracy, completeness and truthfulness of data .... "

142.' Relator was employed as a Senior Financial Analyst in WELLCARE'S Health Services Area from 2002 to 2005, which is made up of the following departments:

Appeals and Grievances, Credentialing, Quality Improvement, Pharmacy, Inpatient Services, Outpatient Services, Behavioral Health Services and Special Populations.

143. Each of the above departments is required to, and does, submit annual targets and initiatives related to its core function and designed to capitalize on profitable opportunities for WELLCARE within each identifiable population of members. Teams within each department are responsible for hitting their targets.

32.

144. WELLCARE employs statistical analysts who are directed to identify high

cost groups within VVELLCARE'S membership that can be targeted for "cherry picking"

-._.

practices, such as diversion or disenrollment,

145. Relator was the primary analyst for the Health Services department

between November 2002 and February 2005. Relator attended monthly Health Services

meetings with TODD FARHA (CEO), Jeff Potter (V.P. of Corporate Development). Dave Smith (V.P. of Medical Economics), Randy Zomermand (V.P. of Health Services),

Ace Hodgin (Chief Operating Officer), Dr. Vincent Kunz (Chief Medical Officer of the

Health Services Area), Lamar Register (Manager of Medical Economics), and others

during which "cos(cont~nment initiativ~s"were disc?sse~ in detail. Durin?monthly meetings held i~ 2003 through 2005, Randy Zomermand presented Todd Farha and other

members of senior management with PowerPoint presentations detailing improper cost-

containment initiatives and Excel reports summarizing the expected and actual cost

savings associated with improperly disenrolled members, including neonatal babies and

terminally-ill patients.

146. In 2003, Relator was instructed by Randy Zomermandto conduct studies

with Dave Smith and Lamar Register to validate current and potential savings per

member disenrollment for various membership groups including, neonatal babies and

terminally-ill patients. The study results indicated the potential for significant cost

savings if a program was developed to identify and attempt to disenroll high-cost

neonatal babies and terminally-ill patients. More specifically, the study findings

identified an average savings of approximately $20,000 per disenrolled neonatal baby and

$11.500 per disenrolled terminally-ill patient. The study findings were presented to

33

Randy Zornerrnand and Dave Smith who then strategized and developed an initiative to

.. create distinct t~ams to focus on disenrolling members in these high cost areas. Randy Zomermand selected Health Services Manager Beth Becker to manage the neonatal

babies disenrollment team and Health Services Manager Judy Conley to manage the

hospice disenroIlment team.

147. For 2004, Randy Zomermand and Dave Smith established a disenrollment

target of 425 neonatal babies anticipated to result in a cost savings of $6.9 million ("CMS

_ Conversion Plan"). Exhibit 7. In order to accomplish this goal. Beth Becker's neonatal

babies team contacted the parents of nco-natal babies and persuaded them to elect to

dis enroll from WellCare's plan and instead enroll in ("convert into") the CMS program.

• _. ~·o, ••••• "', ••• _' .~ e, ... •••• ;' •••• -', ,_" ••• '" '-"-_ ,...,., __ ,_" •• __ ._, .',.~ .0 C •

The neonatal babies team tracked disenrollment progress on a member level basis by .

creating reports which included, among other items, member name, date the "case" was

received by the disenrollment team. nurse assigned to the disenrollment effort,

disenrollrrient date, and the estimated cost savings of disenrollment, Beth Becker

provided these detailed reports to Relator on a regular basis and Relator summarized the

information for inclusion in the Health Services reports presented at the monthly

meetings to Todd Farha and other senior management. .

148. The neonatal babies disenrollment team succeeded in disenrolling 425

babies and "saving" millions of dollars. As a reward, WeHeare paid for a celebratory

dinner for the entire neonatal babies dis enrollment team. Additionally, Beth Becker was

. recognized by Well Care as one of Health Services top employees in 2004 and was given

a significant promotion.

34

149. Similar to the neonatal dis enrollment tracking reports described above,

Exhibit 8 is a document created by Judy Conley on June 7, 2004. The document was

used to track the outcome of terminally-ill members selected for disenrollment, The

report tracks, among other items, the date the team received the case, the member's

response, and the estimated cost savings if the member was successfully disenrolled.

Additionally, Exhibit 9 includes the "Hospice Conversion Plan" which details the

. .

conversion initiative concerning terminally-ill patients and evidences anticipated annual

cost savings of $3 million.

150. Exhibit 10 is a document containing the major metrics discussed during

the m0n.~?~.Y~~a!~.S:-~ices l?eeti?,g ~ith,To~d ~~ha. O~e of_~e ~~trics closely tracked was NICU (neonatal intensive care unit) days per 1000 members. This was a critical high

cost metric for Florida Medicaid accounting for approximately $20 million in annual

expense until February of 2005 when neonatal babies stopped being assigned to

WellCare.

151. On November 13, 2006, Relator had a luncheon meeting with Dr. Vince P.

Kunz, Medical Officer of Well Care's Health Services Area. Because one of Dr. Kunz's

primary duties is "utilization management," he is particularly interested in the above-

described initiatives and targets aimed at cost cutting. During the luncheon. Dr. Kunz

said that although WellCare would continue to "dump members," Well Care had to be

more careful in light of a recent Chicago case involving Amerigroup Corporation,

Additionally. Dr. Kunz also stated that "we [WellCare] would prefer them [members] to

die because it's cheaper [for WellCare]."

35

152. In 2003, WeIlCare's Medical Economics team (Dave Smith, Lamar

Register, Michael Hylton, Relator, and others), along with Jeff Potter and Jack

Shoemacker, analyzed Medicaid populations and determined that mothers and babies that

neededassistance (known as Temporary Assistance for Needy Families (TANF)

members) were highly unprofitable for WellCare (i.e., 90% medical loss ratio (MLR»)

. while the sick, blind, and disabled members (Supplemental Security Income (SS1)

members) were highly profitable (i.e. <70% MLR).

153. Jeff Potter, WellCare's Vice President of Corporate Development, told

Relator that because of this situation, WellCare was going to implement a plan to

aggressively grow SSI membership while concurrently reducing TANF membership in

~..., C ' __ or r '. • •• _.

order to maximize profits for the company. Thereafter, \VellCare set out to accomplish

this goal by (1) providing incentives to its sales representatives to recruit SSI members

and (2) purposely designing benefit packages that would discourage TANF members

from joining WellCare's plans.

154. This strategy succeeded. For example, WellCare was able to change its

membership mix from 85.8% TANF & 14.2% SSI in September 2005 to 83.0% T.<\NF &

17.0% SSI in December 2007. In other words, WellCare's TAl\TF membership decreased

3.2% and its SSI membership increased 19.6% over this period. In comparison, all other

HMOs~combined only decreased T A.l~F membership an approximate average of 1,8%

and increased SSI membership an approximate average of 9.5% during this same period.

155. WELLCARE committed fraud, submitted false data, and made and caused

to be made false records and statements in order to get approval and payment by the

Government of false and fraudulent claims, as set forth below:

36

(a) by discriminating among Medicaid-eligible enrollees on the basis of

such enrollees' health status or need for health services;

(b) by terminating or denying benefits to eligible enrollees because of

adverse changes in their health status or cost of medical care;

(c) by engaging in marketing designed and intended to discourage eligible

enrollees from participating in its health plan based on their health status, their need for

. health services and the cost of their medical care;

(d) by marketing in a manner designed to discriminate among enrollees

and not reach a fair distribution of eligible enrollees across age/gender/eligibility/region

(e) by submitting false, misleading and incomplete data certifications that

failed to reflect the fraudulent and discriminatory marketing and enrollment practices

.~I·.

described herein.

156. By submitting false and misleading certifications, without which payments

would not have been made, WELLCARE and FARHA knowingly made and caused to be

made a false record or statement in order to get false and fraudulent claims paid by the

Government.

157. Based on WELLCARE's conduct in Florida, Relator believes

WELLCARE engaged in discriminatory enrollment and disenrollment practices and

improper denial of services on a company-wide basis.

37

COUNT XI:

Federal False Claims Act - Presentation of False Claims (31 U.S.C. § 3729(a)(I)

158. Relator realleges and incorporates by reference paragraphs 1 through 29

and 133 through 157.

159. Defendants WELLCARE and FARHA knowingly presented or caused to

be presented false or fraudulent claims for payment or approval to the United States.

160. By virtue of the false and fraudulent claims made by Defendants

WELLCARE and FARHA, the United States suffered damages and therefore is entitled

to multiple damages under the Federal False Claims Act, to be determined at trial, plus a

civilpenalty of$5,500to $ii,060 for each violation.

COUNT XII:

Federal False Claims Act - Making or Using a False Record or Statement (31 U.S.c. § 3729(a)(2)

161. Relator realleges and incorporates be reference paragraphs 1 through 29

and 133 through 157.

162. Defendants WELLCARE and FARHA knowingly made, used, or caused

to be made or used, false records or statements to get false or fraudulent claims paid or

approved by the United States.

163. By virtue of the false and fraudulent claims made by Defendants

WELLCARE and FARHA, the United States suffered damages and therefore is entitled

to multiple damages under the Federal False Claims Act, to be determined at trial, plus a

civil penalty of $5,500 to $11,000 for each violation.

38

COUNT XIII~

Florida False Claims Act - Presentation of False Claims Florida Statute § 68.082(Z)(a}

164. Relator realleges and incorporates by reference paragraphs 1 through 29

and 133 through 157.

165. Defendants WELLCARE and FARHA knowingly. presented or caused to

be presented false and fraudulent claims for payment or approval to the Sta~e of Florida.

166. By virtue of the false and fraudulent claims made by Defendants

WELLCARE and FARHA, the State of Florida suffered damages and therefore is entitled

to multiple damages under the Florida False Claims Act, to be determined at trial. plus a

civil penalty of~5,OOO_to $lOpg~for e.acl1vi~Iati(m.

COUNT XIV:

Florida False Claims Act - Making or Using a False Record or Statement Florida Statute § 68.082(2)(bl

167. Relator realleges and incorporates by reference paragraphs 1 through 29

and 133 through 157.

168. Defendants WELLCARE and FARHA knowingly made, used, or caused

to be made or used, false records or statements to get false or fraudulent claims paid or

approved by the State of Florida.

169. By virtue of the false and fraudulent claims made by Defendants WEILCARE and FARHA, the State of Florida suffered damages and therefore is entitled

to multiple damages under the Florida Palse Claims Act, to be determined at trial, plus a

civil penalty of $5,000 to $10,000 for each violation.

39

COUNT XV:

Reverse False Claims in Violation of 31 U.S.C. § 3729(a}(7} and Florida Statute § 68.082(2)(g}

170. Relator realleges and incorporates by reference paragraphs 1 through 29.

171. In August 2006, Defendant WELLCARE was informed by the Florida

Medicaid program that it had erroneously been overpaid $25 million in premiums for

Medicaid beneficiaries who were also eligible for the Medicare program ("dual eligible

beneficiaries").

172. In October or November 2006, the Florida Medicaid program reduced its

overpayment demand regarding dual eligible beneficiaries to $3 million based on an

erroneous file feed of WELLCARE members.

173. Realizing that the underlying file feed of members was erroneous and that

. the true overpayment was much higher than $3 million, DefendantWELLCARE quickly

repaid the $3 million amount as if that were the true overpayment amount, while

concealing, avoiding and decreasing its contractual obligation to repay the rest of the

money it was overpaid.

174. Vice President of Government Affairs Marc Ryan said "This amount is

equal to the amount paid by Arnerigroup which has half as many duals as we do."

175. In June 2007, Alphons Immanuel, Special Populations Business Analyst,

was asked how WellCare was able to get paid for dual eligible beneficiaries that are not

in WellCare's membership system. Immanuel replied "Oh the member is in our system.

It is just that they are not eligible during the month, but the premium st111 gets paid.

Sometimes the Government takes back the money when they find out but sometimes they

don't."

40

176, DLl.e to Defendant ~ELLCARE's actions, the State of Florida suffered

damages and therefore is entitled to multiple damages under the Florida False Claims

Act, to be determined at trial, plus a civil penalty of $5,000 to $10,000 for each violation.

177, Based on WELLCARE'S conduct in Florida, Relator believes

WELLCARE concealed overpayments due to data errors on a company-wide basis.

COUNT XVI

Reverse False Claims in Violation of 31 U.S.C. § 3729(a)(7} and I<lorida Statute § 68.082(2)(g}

178. Relator realleges and incorporates by reference paragraphs 1 through 29.

179. In and prior to August 2006 and continuing thereafter, defendants

AMERIGROUP. VALUEOPTIONS, HUMANA, UNITED HEALTHCARE, and VISTA

- .. __ " .. _.. .' ._ . _ ' _, ~h... " L • •• • ._,"" •

utilized similar strategies to WELLCARE'S tactics described in this complaint in order to

improperly retain overpaid premiums and avoid contractual refund obligations to Florida

Medicaid, and collectively reduce a regulatory agency's ability to detect the companies'

improper actions.

180. AMERIGROUP, VALUEOP110NS, HUMAl"iA, UNITED

HEALTHCARE and VISTA, like WELLCARE, knowingly made and used false records

or statements to conceal, avoid and decrease their obligations to repay erroneous

Medicaid overpayments.

18t. Some of the cooperation between WellCare and Amerigroup involves

coordination of their false claims and reverse false claims, so that both are consistent in

false billing practices, minimizing the chances of detection by a Medicaid audit

questioning discrepancies by each company in claimed costs for the same services.

41

,182. The foregoing was reported to Relator by Bill Kale, M.D., Vice President

of Harmony Behavioral Health, on August 10. 2006 and later supported by Kern Fritsch,

Senior Director of Finance for Harmony Behavioral Health and a former employee of Amerigroup, In addition, Financial Analyst Greg West informed Relator that, like

Well Care, Amerigroup had received large sums from Florida Medicaid which

represented inadvertent overpayments, and that Arnerigroup intentionally retained and

continues to retain such overpayments without notification to Medicaid.

183. Around March 29,2007, Relator had a conversation with Kerri Fritsch and

Greg West in which Greg West discussed the "illegal scenarios, the more illegal the

better" for underreporting WellCare's true payback obligation to the State of Florida for

••• , • ~'c, • ,.~c,_ ,~._ r _ •. _ •.•••. __ , ._._._... • .. ~ L ••• "".n ~ • '" • ,_. •. __ . _

2006 which West had discussed with TODD FARHA and PAUL BEHRENS. During

that conversation, Kerri Fritsch stated that she had been responsible for providing

scenarios for underreporting Amerigroup's true payback obligation to the State of Florida

when she had worked at Amerigroup prior to being hired by WellCare. Ms. Fritsch said

"I know how difficult this process can be and how difficult it can be to keep all the

accounting straight, because I had to do the same thing back at Amerigroup."

184. On April 17, 2007, Provider Relations Manager Russell Morgan explained how V AUJEOPTIONS defrauded Florida Medicaid through a capitated arrangement like

HARMONY and through pricing claims at up to three times the Medicaid rate in order to

avoid a payback obligation.

185. In approximately May 2007, Relator was present when Dr. Kale offered a

me to Kerri Fritsch containing codes shifted by Amerigroup to avoid refunds or paybacks. Ms. Fritsch refused Dr. Kale's offer due to her concerns about legal liability.

42

Relator recorded and gave notes regarding this exchange to the investigating agents. See Exhibit 11. This information evidences other defendants' (described in Count XVI) utilization of tactics, similar to WeIlCare's tactics, to improperly avoid refund obligations.

186. In September 2007, Relator had a meeting with Kerri Fritsch and Greg West. During that meeting, Kerri Fritsch stated that she had persuaded the CEO of Amerigroup to use inflated costs for the 80/20 behavioral health payback calculations Ms. Fritsch said the CEO of Amerigroup asked initially "Why don't we just submit the actual costs?" and Ms. Fritsch explained to the CEO "if we did that it would cost Ame~group millions."

187. In addition, Wellt.are's fraudulent schemes outlined in Counts VI and IXX also invol ved Humana Medical Plan, Inc., United Healthcare of Florida, Inc., Vista Healthplan, Inc., Arnerigroup Corporation, and other IL\I10s because the overpayu:ents for infants described in Count VI and the systemic programming error concerning age groupings described in Count IXX affected all Florida Medicaid HMOs working with AHCA.

188. Due to the actions of Defendants WELLCARE, AMERIGROUP, VALUEOPTIONS, HtJMANA, UNITED HEALTHCARE and VISTA, the United States and the State of Florida suffered damages and therefore are entitled to multiple damages under the Federal False Claims Act and the Florida False Claims Act, to be determined at trial, plus applicable civil penalties for each violation,

43

COUNTxvn

Reverse False Claims in Violation of 31 U.S.C. § 3729(a)(71 and Florida Statute § 68.082(2)( g)

189. Relator realleges and incorporates by reference paragraphs 1 through 29.

190. In July 2005, AReA granted a significant premium increase to Wel1Care,

Amerigroup,and other HMOs and ValueOptions and other prepaid mental health plan

providers for the Medicaid behavioral health carve out as a result of companies inflating

their actual expenses for behavioral health services.

191. In April 2006, Financial Analyst Greg West prepared a data feed of

July 2003 and June 2005. Institutional encounters consisted of one WellCare generated

procedure line which captured the total cost of the claim as well as the actual individual

procedures of the claim with no pricing.

192. Following WellCare's submission of this data feed, AHCA contracted with

an actuarial firm named Milliman Consultants and Actuaries ("Milliman") to review

WellCare's data feed. Milliman erroneously priced the individual procedure lines in

addition to capturing the entire cost of the claim already accounted for on the WellCare

generated procedure line: Milliman overpriced WellCare's behavioral health institutional

costs by $9.2 million for 2003 and by $10.2 million for 2004.

193. This data feed was sent by WellCare to AHCA to be used for the

behavioral health outpatient premium rate changes starting July 2006. In July 2006,

AHCA granted WellCare another premium increase for behavioral health outpatient

services.

44

194, . In September 2006, Defendant WELLCARE realized that the Agency for Health Care Administration· ("AHC~"thad . erroneously overpriced WELLCARE's

C • • • •

behavioral health institutional costs by $9.2 million for 2003 and by $10.2 million for

2004 and that AReA had relied on those erroneously overpriced costs in granting

WELLCARE a premium increase for behavioral health outpatient services in July 2006.

195. Despite this knowledge, WELLCARE failed to notify AHeA and

knowingly retained and failed to return the inflated premiums it received following the

July 2006 premium increase for behavioral health outpatient services.

196. WELLCARE thereby concealed, decreased and avoided its contractual

obligation to repay and transmit to the Government and the State of Florida premium

• _ -,- ., __ .. ~ _~c ~ L',_""'< ·'Y~·'·' "', ,_._ ,ro· •. -,~ ..... ~~_ ., •• _., •••• _. ._~ .. T_"·_"'_~>· •• ~ __ •••• _~_._ ••• __ ._~ •••••• ,,_ •••• ro.

amounts which WELLCARE knew were based upon AHeA's mistaken pricing of

'VELLCARE's behavioral health institutional costs for 2003 and 2004.

197. On September 13, 2006, AHCA sent Well Care an encounter file which

. caused Financial Analyst Greg West to realize that Milliman, as discussed above, had .

erroneously priced component line items which had already been included in the total

price for each encounter line. West then sent an email to Robert Butler, Director of

Medicaid Policy and Analytics, on September 15,2006, attached as Exhibit 12, advising

Butler that Milliman's error had "cause[d] WeltCare's institutional claims to be over

. priced. II In spite of this knowledge, however, WellCare never advised ARCA of

Milliman's error and never refunded the money which Well Care had been overpaid due to

Milliman's error.

198. Due to Defendant WELLCARE's actions, the United States and the State

of Florida suffered damages and therefore are entitled to multiple damages under the

45

Federal False Claims Act and the Florida False Claims Act, to be determined at trial, plus

a civil penalty of $5,500 to $11,000 for each violation.

199. Based on WELLCARE'S conduct in Florida, Relator believes

WELLCARE made false and fraudulent data submissions on a company-wide basis to

support improper refund or pay back amounts and to provide the basis for inflated

premium rate increases.

COUNT XVIII

False Claims and Reverse Fruse Claims in Violation of 31 U.S.C. § 3729(a)(1} and (a)(7) and Florida Statute § 68.082(2)(a) and(2)(gl

200. Relator realleges and incorporates by reference paragraphs 1 through 29.

201. On December 29,2006 and January 2, 2007, Melanie Brown-Woofter, the

Acting Bureau Chief of AHC,\'s Health Systems Development unit, requested by letter

that WeBCare submit certified Medicaid behavioral health encounter data for Areas 1 and

6. The encounter data was initially required to be submitted by January 31, 2007, but t

WellCare's request, ABCA later agreed to extend the deadline to February 9,2007.

202. On January 2, 2007, ABCA official Ralph Quinn and Robert Butler,

Wellcares Director of Medicaid Policy and Analytics, exchanged emails confirming that

AHCA required encounter data for the period between July 1, 2005 and June 30, 2006.

Robert Butler also requested, and Ralph Quinn agreed, that WellCare could submit

additional encounter data for the period between July 1, 2004 and June 30, 2005 for

AHCA's consideration in setting future premium rates.

203. On that same day, Robert Butler sent an internal Well Care email

confirming that Ralph Quinn and ACHA wanted actual encounter pricing in order to see

Wel1Care's actual costs for providing services.

46

204. WedlCarc management decided not to submit accurately priced encounter

data for Areas I and 6 to AHCA. Instead, WeltCare fraudulently inflated the cost of each

procedure by between 218 percent and 299 percent of the actual cost. CFO PAUL

BEHRENS characterized WellCare's response to ARCA this way: "Yeah, I know, a

donut cost a dollar, and we're just saying it cost $2, r get it."

205. In addition, Relator was instructed by Robert Butler to meet with Financial

Analyst Greg West and use the "same duplication method" used in the previous year's

submission in an attempt to capitalize on the same type of Milliman error described in

Section G.I. herein and Count XVII of the Complaint. At a meeting which included Vice

President of Medical Economics Peter Clay, Relator was instructed to include a WeflCare

_~<_. ,~" .' ..• ~'. c·"·_·_ •• " .-.""~ r ··~,c •• • ~ •• _"

generated procedure code capturing the entire cost of the claim in addition to the actual

individual procedures with no pricing with the expectationthat AHCA would once again

duplicate each claim. Peter Clay said "It's highly illegal, but I haven't heard any of you

come up with an idea that's better than mine." After that meeting, Peter Clay asked

Relator 'Why did you invite so many people to that meeting? You have to be careful, this

is fraud."

206. On or about February 9, 2007, WellCare submitted this fraudulently

inflated behavioral health encounter data for the period July 1, 2004 through June 30,

2006 from WeIlCare of Florida, lnc. and HealthEase of Florida, Inc. under a cover letter

signed by MT Sartaur, President of Wel1Care of Florida, which certified that "Itlo the

best of my knowledge, information and belief as described herein, the information

submitted is accurate, complete and truthful." The fraudulently inflated encounter data

submitted consisted of 161,170 claims.

47

207 ~ Composite Exhibit 13 contains a chronology with supporting documentation evidencing and detailing the chain of events 111 connection with WellCare's improper Areas 1 and 6 encounter data submittal.

208. On February 21, 2007, Melanie Brown-Woofter requested that WelICare submit behavioral health encounter data for Medicaid Areas 5 and 7 for the period July 1, 2005 through June 30,2006 by March 5, 2007 to AI-lCA. Ms. Brown-Woofter stated that this "request for data for Areas 5 and 7 was inadvertently omitted with the previous request for data for Areas 1 and 6." At WellCare's request, the deadline was executed to March 9, 2007 by AHeA.

209. On February 22, 2007, Robert Butler sent an internal WellCare email to Greg West, Kerr] Fritsch, Senior Director of Harmony Behavioral Health, and the Relator discussing how and whether to price the Areas 5 and 7 encounter data. Even though Mr. Butler knew that Ralph Quinn, on January 2, 2007, specifically requested and required pricing in connection with the Areas 1 and 6 submittal, Mr. Butler suggested pricing should not be included in the Areas 5 and 7 submittal, On that same day, Kerri Fritsch instructed Relator to prepare three different scenarios for pricing the encounters in order to analyze and determine whether to submit the encounter data with pricing or without pncmg. The three methods of pricing the requested Area 5 and 7 encounter data included: (1) the actual capitation paid to Harmony Behavioral Health spread over the encounters for the period; (2) the actual fee for service cost that Harmony Behavioral Health paid to the providers; and (3) the encounters priced at Medicaid fee schedule rates.

210. On February 27, 2007, Kerri Fritsch discussed the Areas 5 and 7 encounter data submittal obligation and the three different pricing scenarios with Vice President of

48

Accounting Bill White and CPO PAUL BEHRENS at a P&L meeting. During that

meeting, PAUL BEHRENS said "Send AHCA the encounter data without pricing and

wait and see if AHCA responds. If AHCA demands pricing, then we will determine

which pricing scenario to use," WellCare decided not to submit any pricing for these encounters in order to avoid AHCA lowering WellCare's premium rates and decided

instead to strip fee for service payments made from the encounter data submitted to

AHeA.

Rather than submitting accurately priced encounter data to AHeA,

WELLCARE submitted encounter data in which fee for service prices paid were stripped

from such encounters and the individual lines supporting the summary line for each

procedure were set to zero in anticipation that AHCA's actuary service WOUld, as it did

.:.: •• :",.:.:,'.:. - .":. - --. • •• ~- ,. , ••• y,

the prior year, erroneously duplicate price the individual procedure lines.

211. On March 1, 2007, Robert Butler sent an internal WellCare email

summarizing the Areas 5 and 7 encounter data request and discussing why pricing was

not to be included in the submittal to AHCA, including that even though the data

"submitted for Areas 1 and 6 was priced based upon what EAS/wCG [allegedly] paid to

HBH," he recommended submitting the Areas 5 and 7 encounter data without pricing

because «using that methodology results in a depressed PMPM." This email also

attached and forwarded a draft submittal letter to ARCA which strategically included the

language stating that "[ajs the pricing of the encounters was optional per the data request,

no payment information has been included due to system issues and the limited time

frame provided for submission" and a certification that the information submitted was

"accurate, complete and truthful."

49

212. However, such representations were false and fraudulent because: (1)

WenCare knew the Areas 5 and 7 data request was inadvertently omitted by AReA when

it requested the Areas 1 and 6 data; (2) WellCare knew Ralph Quinn. had previously

specifically requested pricing for Areas 1 and 6; (3) WeUCare submitted pricing (albeit

falsified) for Areas 1 and 6; and (4) pricing was not omitted for Areas 5 and 7 because of

"system issues" or "limited time frame," Well Care did not have "system issues" and it

had more than sufficient time to thoroughly analyze various pricing scenarios. Rather,

. WellCare straregically chose not to include pricing in order (1) to prevent ARCA from

learning about WellCare's true costs for Medicaid behavioral health services so that

Well Care would not be required to refund some of the premiums it had received in 2006

and (2) to help ensure that WellCare would receive further premium increases in July

2007 and thereafter.

213. On or about March 2, 2007, Robert Butler requested, and subsequently

received, an extension to March 9, 2007 for the Areas 5 and 7 encounter data submittal.

On or about March 6, 2007, WellCareof Florida President MT Sattaur executed the final

forwarding letter containing the false and fraudulent certifications described above.

Thereafter, per Robert Butler's instruction, the forwarding letter and final encounter data

file without pricing was submitted to AReA.

214. Composite Exhibit 14 contains a chronology with supporting

documentation evidencing and detailing the chain of events in connection with

WellCare's improper Areas 5 and 7 encounter data submittal.

215. THADDEUS BEREDAY approved WellCare's improper encounter data

submitted for Areas 1 and 6 and for Areas 5 and 7.

50

216. In March. 2007, Senior Director of Medical Economics Jian Yu told

Relator and Senior Director of Harmony Behavioral Health Kerri Fritsch "Each year we

come up with a different method for avoiding payback. I' m going to create a standard

method that we're going to use going forward to submit the payback."

217. In an April 27. 2007 letter to WellCare, Milliman specifically requested

that WellCare let "ARCA and Milliman know if there are any other data issues that

suppress the encounters or if you have any other reasons to believe this data is either

inaccurate or incomplete" and that Wel1Care should thoroughly review Milliman' s

summaries and "inform ARC A and Milliman of any defects or inconsistencies with

[WellCare's] reporting." However, WellCare never disclosed that its Areas 1 and 6

encounter pricing bad been falsified and that its Areas 5 and 7 encounter pricing had

intentionally been omitted to mislead ARCA.

218. Composite Exhibit 15 contains a chronology with supporting

documentation evidencing and detailing the chain of events in connection with MICA's

rate-setting consultant's (Milliman) analysis and utilization of WellCare's improper

Areas 1, 5, 6, and 7 encounter data submittals used to help AHCA develop and certify its

September 1, 2007 - August 31, 2008 capitation rates.

219. On April 17. 2007, Hazel Greenberg, the Program Administrator of

AHCA's Medicaid Program Compliance office within the Bureau of Managed Health

Care, specifically requested that HealthEase and StayWell of Florida submit "the

encounter data, with codes and reimbursement amounts for each code, for documentation

for the 2006 Community Mental Health and Targeted Case Management Expenses." On

that same day, Robert Butler sent an internal email acknowledging that "lwle may need

51

to discuss as this [request} appears to present certain challenges. Please advise how you

recommend we proceed," CPO PAUL BEHRENS responded to the email and identified

that he and Jian Yu would become responsible for providing the requested information.

220. Despite AHCA's specific pricing request, Paul Behrens and Vice

President of Government Affairs Marc Ryan decided to submit the encounter data

without pricing. From May 9, 2007 through May 20,2007, Greg West worked with Jian Yu, Marc Ryan, and PAUL BEHRENS to prepare the non-priced encounter data. On

May 21, 2007, Greg West submitted to AHCA, after PAUL BEHRENS' and Marc

Ryan's review, the data for 390,135 encounters without pricing data and with fee for

service payments made to providers "set to blank." Approximately 2/3 to 3/4 of an

encounters had such payment data which was not provided to ARCA.

221. WELLCARE did this (1) to prevent AHCA from learning about

WELLCARE's true costs for Medicaid behavioral health services so that WELLCARE

would not be required to pay back some of the premiums it had received in 2006; and (2)

to help ensure that WELLCARE would receive another premium increase in July 2007 ..

222. On June 22, 2007, David Starn of ARCA sent an email to Dr. Bill Kale,

Vice President of Harmony Behavioral Health, regarding deficiencies in the encounter

data submittal and stated "[mjost importantly, there is no Amount Paid for any of the

other encounters reported." Mr. Starn required that WellCare "re-submit the reports" to

AHCA by June 26, 2007 "with correct data."

223, On June 26, 2007, Greg West told Relator that PAUL BEHRENS and

Kern Fritsch instructed Mr. West to falsely re-price the encounter data in order to submit

priced encounter data to AReA which could support WellCare's 2006 refund amount.

52

On that same day, Mr. West emailed the file containing the re-priced encounter data to

PAUL BEHRENS, Jian Yu, and Kerri Fritsch. Thereafter. the falsely priced encounter

data was submitted to AHCA.

224. Composite Exhibit 16 contains a chronology with supporting

documentation evidencing and detailing the chain of events in connection with

WelICare's improper encounter data submittal concerning WellCare's 2006 Community

Mental Health and Targeted Case Management expenses.

225. WELLCARE and BEHRENS thereby made and used false records to

conceal. avoid and decrease its obligation to repay and transmit to the Government and

the State of Florida premium amounts which WELLCARE and BEHRENS knew should

<,--,". • -".,.,~ ••• ".~. __ ·,·~ __ c~" ••••• _ .~._~.,,". ".,.~,,_.. • •• "~_. _.... ,<._

have been paid back to AHeA pursuant to the contractual and statutory pay back

requirement, and made or used false records to get false claims in the form of increased

premiums paid or approved.

226. Due to the actions of WELLCARE and BEHRENS, the United States and

the State of Florida suffered damages and therefore are entitled to multiple damages

under the Federal False Claims Act and the Florida False Claims Act, to be determined at

trial, plus a ci vil penalty of $5,500 to $11,000 for each violation.

227. Based on WELLCARE'S conduct in Florida, Relator believes

WELLCARE made false and fraudulent data submissions on a company-wide basis to

support improper refund or payback amounts and to provide the basis for inflated

premium rate increases.

53

COUNTIXX

False Claims and Reverse False Claims in Violation of 31 U.S.C. § 3729(a)(1) and (a)(7) and Florida Statute § 68.082(2)(a) and (2)(g)

228. Relator realleges and incorporates by reference paragraphs 1 through 29.

229. . Beginning in ro.id-2005, the Florida Medicaid program began erroneously

overpaying WELLCARE $250,000 to $500,000 per month due to a systemic

programming error concerning age groupings.

230. After approaching Director Jian Yu in order to unde~standthe

circumstances surrounding the erroneous overpayment, Relator was directed by Ms. Yu

to follow-up with Senior Actuary Sarah Duyof in order to obtain the details of the

overpayment. Ms. Duyof carefully explained to Relator her analysis of the variance

between the contract specifications and the actual payments WellCare received from

ACHA.

231. By 2006, top WellCare officials were aware of these overpayments.

Director of Florida Finance David Herndon and Jim Beerman, Vice President of Florida

Finance, told Relator that they had discussed these overpayments with Vice President of

Medical Economics Peter Clay in order to find out whether Wel1Care would set aside

these amounts in its internal accounting of income. Well Care (through CFO PAUL

BEHRENS and Peter Clay) decided to continue to include these overpayments in its

internal income accounting and deliberately chose not to refund these overpayments,

232. A mid-range monthly overpayment of $375,000 for the two and a half

years since mid-200S yields an estimated overpayment of $11,250,000 for WellCare.

54

Since WeUCare had only approximately 40 percent of Florida Medicaid members, the

.. combined overpayments received by Arnerigroup Florida, United Healthcare, Humana,

. and Visita was likely around $16,875,000 thru 2007 and continuing.

233. Because this systemic error affected all Medicaid HMOs, Defendants

AMERIGROUP, V ALUEOPTIONS, UNITED HEALTHCARE, HUMANA, and VISTA

also received similar overpayments.

234. By 2006, top WELLCARE officials were aware of these overpayments.

Despite this knowledge, WELLCARE and BEHRENS failed to notify AReA and

knowingly retained and failed to return these overpayments.

235. Although WELLCARE and BEHRENS knew of these overpayments, they

~".,~_, ~~ __ L'~' •. _"; "':, ". ", •• " c'.",. , .,.",".'_' ..

knowingly made and used false records and statements to conceal, avoid and decrease

WELLCARE's contractual obligation to payor transmit money to the Florida Medicaid

Program.

236. Defendants AMERIGROUP, V ALUEOPTIONS, UNITED

HEAL THCARE, HUMA.t~A, and VISTA similarly knowingly retained and failed to

return these overpayments and knowingly made and used false records and statements to

conceal, avoid and decrease their contractual and statutory obligations to payor transmit

money to the Florida Medicaid Program.

237. Due to the actions of Defendants WELLC ARE , BEHRENS,

VALUEOPTlONS, AMERIGROUP, UNITED HE.A.LTHCARE, HUMAJ'-JA, and

VISTA, the United States and the State of Florida suffered damages and therefore are

entitled to multiple damages under the Federal False Claims Act and the Florida False

55

Claims Act, to be determined at trial, plus a civil penalty of $5,500 to $11,000 for each

violation.

238. Based on WELLCARE'S conduct in Florida, Relator believes

WELLCARE concealed overpayments due to systemic programming enol'S on a

company-wide basis.

COUNT XX

False Claims Conspiracy in Violation of 31 U.S.C. §3729(a)(3) and Florida Statute §68.082(2)(c}

239. Relator realleges and incorporates by reference paragraphs 1 through 29.

240. Between at least 2004 through at least October 2007, TODD FARHA.

PAUL BEHRENS, THADDEUS BEREDAY and other WELLCARE employees

conspired to defraud the United States, the State of Florida and other states by getting

false and fraudulent claims allowed or paid.

241. In furtherance of this illegal agreement FARHA, BEHRENS and

BEREDA Y performed the following acts:

A. FARHA directed WELLCARE employees to develop a plan to

significantly reduce or avoid future Florida Medicaid repayment obligations for Targeted

Case Management and Community Mental Health services.

B. FARHA approved falsely reporting unrelated expenses as Targeted

Case Management and Community Mental Health costs in order to reduce

\VELLCARE's payback obligations to Florida Medicaid.

C. E~HA approved WELLCARE' s fraudulent refund payment to

Florida Medicaid in June 2006.

56

D.BEHRENS approved WELLCARE's fraudulent refund payment to

Florida Medicaid in April 2007.

E. BEHRENS directed that v\TELLCARE's internal auditors stay

clear of auditing HARMONY BEHAVIORAL HEALTH, INC., in April-May 2006.

F. . FARHA approved WELLCARE's contract with South Broward

Hospital District in December 2005 knowing that this contract was designed to reduce

WELLCARE's payback obligation to Florida Medicaid.

G. FARHA approved WELLCARE's payment of inflated reinsurance

to its wholly-owned Cayman Islands subsidiary.

H. BEHRENS instructed that IBNR charges were not to be analyzed

or questioned .

. 1. BEHRENS directed that the $3 million of overpayments received

from New York Medicaid be kept by WELLCARE and not refunded.

J. . FARHA approved WELLCARE's efforts to disenroll neonatal

babies and terminally ill patients.

1<.. FARHA, BEHRENS and BEREDAYapproved WELLCARE's

submissions of fraudulent encounter data to AReA from Areas 1 and 6 and from Areas 5

and 7.

L. BEHRENS directed that monthly overpayments made by the

Florida Medicaid program beginning in mid 2005 due to a programming error concerning

age groupings be kept by WELLCARE and not refunded.

57 .

242. The United States and the State of Florida suffered damages from this

conspiracy and are therefore entitled to multiple damages under the Federal False Claims

Act, and the Florida False Claims Act, to be determined at trial.

Praver for Relief

WHEREFORE, Relator respectfully request this Court enter judgment against

Defendants and order:

(a) That the United States, the States of Florida, Illinois, Indiana, Louisiana,

New York, Georgia, and Hawaii, be awarded damages in the amount of three times the

$400-$600 million single damages sustained because of the false and fraudulent claims

alleged within this Complaint;

(b) That the maximum civil penalties allowable be imposed for each and

every false and fraudulent claim that Defendants presented to the United States, the States

of Florida, Illinois, Indiana, Louisiana, New York, Georgia, and Hawaii;

(c) That pre- and post-judgment interest be awarded, along with reasonable

attorneys' fees, costs, and expenses which the Relator necessarily incurred ill bringing

and pressing this case;

(d) That the Court grant permanent injunctive relief to prevent any recurrence

of the False Claims Act violations for which redress is sought in this Complaint;

(e) That the Relator be awarded the maximum amount allowed pursuant to the

False Claims Act and the false claims statutes of the States of Florida, Illinois, Indiana,

Louisiana, New York, Georgia, and Hawaii; and

(f) That this Court award such other and further relief as it deems proper.

58

Demand for Jury Trial

Relator, on behalf of himself, the United States, and the States of Florida, Illinois,

Indiana, Louisiana, New York, Georgia, and Hawaii demands a jury trial on all claims

alleged herein.

~.~~ .•

..... ....-=-~

~-- .

BARRY A. COHEN, ESQ. Florida Bar No. 096478

(t-- f 1Z.....-

DA.,.1\JIEL N. GASTl, ESQ. Florida Bar No. 0269440

Law Office of Daniel N. Gasti, P.A. 4326 New Broad Street, Unit 204 Orlando, FL 32814

(407) 4] 5-9390

.. _.,._AU9!:l!§yiQrBdB:.tQr:

KEVIN 1. DARKEN, ESQ. Florida Bar No. 0090956

... _~.C::.G_!-IE~, F9~TER¥R9~~:4~)~'..f.:~:\ .. _ 201 E. Kennedy Blvd, Suite 1000 Tampa, FL 33602

Tel: (813) 225-] 655

Attorneys for Relator

CER11FICATE OF SERVICE

I HEREBY CERTIFY that a true and correct copy of the foregoing Seventh

Amended False Claims Act Complaint and Demand for Jury Trial has been furnished by

Hand Delivery to Assistant United States Attornev Charles Harden, III, United States

Attornev's Office; 400 N. Tampa Street, Suite 3200, Tampa, FL 33602; and by Certified

Mail, Return Receipt Requested to the United States Attorney's Office, Attn: Civil

Process C1erk, 400 North Tampa Street, Suite 3200. Tampa, Florida 33602; Allie PanQ",

Trial Attorney. United States Department of Justice, Civil Division, Commercial

Litigation Branch, Civil Frauds Section, 601 D Street NW, Room 9150, Washington, DC

20004; Attornev General BilJ McCollum, Office of Attorney General, The Capitol.

Tallahassee, Florida 32399-1750; Chlef Financial Officer AIex Sink, Department of

59

Finance, 200 East Gaines Street, Tallahassee, Florida 32399-0300;::\ttorpcy General Lisa Madigan, 12'h Floor, 100 West Randolph Street, Chicago, Illinois 60601; Legal

Office, Dljnois State Police, 124 East Adams Street, Room 102, P.o. Box 19461,

Springfield, Illinois, 62794; Attomey General Steve Carter, 302/402 West Washington

Street. IGeS-5th Floor, Indianapolis, Indiana, 46204; msncctor General David Thomas,

150 West Market Street, Room 414 1STA, Indianapolis, Indiana 46204; Attorney

General Charles C. FotL h!..l. P.O. Box 94005, Baton Rouge, Louisiana 70804; Attorney General Andrew M. Cuomo, 120 Broadway, New York, New· York 10271-0332;

Attorney General Thurbel1 E. Baker, 40 Capital Square, SW, Atlanta, Georgia 30334;

and Attorney General Mark Bennett, 425 Queen Street, Honolulu, Hawaii, 96813, this

Kevin J. Darken

60

APPENDIX EXHIBIT C

:'.·.i.

UWiTEt:kSTATES DiSTRict COURt MtbDLE D!STRICT OF FLORILtA.,:

=: . "TAK~pA blVISror-f' . .',

Case 8:09-cr~00203~JDW-E:AJ

:-:'_.'

·U~nE:DSTAtE$.':QF.AMERjC~

'. ,Y, :

VyELLqAREHEALTH PLANS, It4ct

. DEFERRED PROSECUtioN AG'R'EEMENT BETWEEN THE

UNITEO' STATES ATTORNEY'S OFFicE FOR THE MIDDLE DISTRICT OFFLPR!Dft4,

....... .. . . THE FLORiDA ATTORNf;:Y GENERAL'S OFFICE, AND ..'. ..'

WelLCARE HEALTH pLANS. n4C.lAND iTS AFFII.':IAtES AND SUBSlDfA;RTE.s.

-. ;:

.I~

1, Parties and Effective Date: WeBears Health Plans, lnc., antUts arriHates a))(1

~ubsidiaries. ihc1qding but not limited tQ,.H~rmony Behaylqralr/ealth, Inc., HealtiieasE! br'Florioa, lnc., vVel1Care of Florida, lno., Wel.1 Care HMO, Inc., Comprei1enslv'e Reinsurancef Up., and Cqrnprehensiv~ Hea,lth, Mc::Hiagernenf, lnc, (hereinafter!· collectively identified as "We!lCare"), the Untted States Attorney's qffice fcit !heMJddr~ District of.Florida (!fUSAOU), and the Florida Attorney Gerteral'sOffice (hereihaffsf'j .collectively identified as the "Offices"), are parties to this DeferredprosecUtibil;, ' .•. Agn~errerit ("DPN' or "Agreemenl"). The EffectiVe Date of this Agreem€mt shallbs:

Tuesday, May 5,2009,' .

';2.:. Resolution: fhi?9fficeshaveagreectto permit WeltCar? tcerrterlnto thHt

.Agreement With the Offices in lieu of the Offlcesi pursuit or a criminal conviction 'of WellCare. In reaching this decision.ffre Offic~s have carefully Weighed and considet~.9. WeUCare's rernedlalactlons to date. inc[l(din~ its Willingness to {alundertakeE\ddltiqnru .rernediatiQ!1 as necessary; (b) accept end acknowledge responslbillty for certaln past conduct giving rise to this Agreement; (c) continue j~~ cooperatiqn with the Offices 8ltr9;;. ,other governmentai aqencles; and (d) demonstrate Its good faith and comrnltrnent tafu!li:, compliance with aU federal and state health care taws; The Offices have also

considered the potential impact Upon current Florida health care program redptentsi.1' and the possible adverse consequences to lnnoceru VVeflCare employees -: ahtiQther' V~e!lCare stakeholders that could result from a conviction.ot WefiCare.

3. Duration: The duration of thts OPA shall be thirfy~sh: months from the EffecUve,.

Pate of this Agreemenf. However, after a period or eightee,n months, the USAO may agree to reduce the duration of this Agreement to a term of twenty-four months UpOl'l. cdn?k:l?ration of (a) vyeHCar~·$. c9ntil1ued remedlal actions: (b) WeU.ca(e'syo"mpliancg;.~ with· alt federal and state healU1care law,s and regulations; {c) the' wr\ttG'n JyipnW>t'$ ' ..

. . ,', :_-_ r': - -;: "':~"',~-'" ~~

tWtthhi thi$';ASgteerf1€'rit.~'m? ~i:1tfJ1S ';Y~dPi:ei}~l;"~.f:I~i~§nenqj~t¥1;; ~f~US9t

tnrencbsna.,eab!y anQ,8.re d;eem~qtoh?v~ thlq. s~m~.mg§mn9.· . .' .

~./:',~: . . . . -. '. '. . .' .. "',', . . .. . - - .

! \:/';""~"""~~'!O'! .. .'m-"'_, .. ""''''''',._'''''' r: !!'OIl' ...... ~'!"!I!"-.._,"""J;Z;_;~::;:i,;,,,!!,!:0L.t!l!!ll, -!"""-=-;.-~~"".\E:""~::7""' .. t£!!!'!:,t!l!!ll~··!I!lli;q~?Jl!!I·:~4-!!lIl~A..""".$~·!!'m'?:~"". __ :,_¥I!!I!';~t""'-,<~~r."'~..:"'"!-..,:-"",,;,/""'.t.~""";"_::-?~:,.}"";<;£!'!"!l·~*::'!'!!!·F!!S!:;~~~.;"""*W",;:}"'_".::~~~"""+K.!IJ'!'!3J ~~.z!!lm_"'h .... <¢8 .... ;s;m .... - g ... -:*""'/? ..... ·,mg::; ·l'!1i .... _?:-, ... ~~""'S'!!"l·:J!!!!i,;""";;ZJ{Ilf!2J.¢l§~··~-- .... ~··""";·fA!!!!'_)~!&:J4J:"""._~ .~ .. "."'-""'~'!'J\!!·~!f,=·'~:""'~~~"""<fl!!."'!;.~.:.,:~ .. :.~ .... ;.f '. :.:.§!.;~ .. ,.~ .. ~ ..... ::'.*""'JfJ&!!!'!: .. /~ .... ~,"c._~""""f9F ... ~:~~.",:-~

_. . -';~~'.:: .::.: -: . -. " ;-. '~:,' I':: .~\; :,.-.,: : "c: - . .: :.,:-,:-".:~:'~;== <', ---.::.,"_-,'::. ':::~ _::_.: '.- .'.;. :.'. _,' -: '-. ',-,_-:- - '_ ',':' :;=,' _~/~" .. :;._ ';-~ _. :.",':~ ',':".'~ ~'.::;~-.;:' .-:~:-;.: -.-, : ,',: .' 0.: ~'--::'::'~.: '.:":.:'" .;'., ',-. _.' ":' • .'_. _.~.: -.,. -. -, :'. <.~ .~>

Case 8:09~cr·00203·JDW·EAJ· Document 4 Filed 05/05/2009. Page 2 of 17 _

Reports described below in paragraph 14 of this Agreement; and (d) WellCare's satisfaction of all obligations under this Agreement.

4. Charging Document: On the Effective Date of this DPAI an Information will be '. publicly filed by the USAO in the United States District Court for the Middle District of . Florida, Tampa Division, charging We If Care with conspiracy to commit health care fraud against the Florida Medicaid program tn WeUCare's reporting of expenditures under its 80/20 community behavioral health contracts, and against the Florida Healthy Kids Corporation program under certain Florida Healthy Kids Corporation contracts, in violation of 18 U.S.C. § 1349. Said Information will be filed together with a Jegalfy executed Waiver of Indictment

5. Statement of Facts: WellCare agrees that a Statement of Facts, attached hereto

as "Exhibit A/I and this DPA will also be publicly filed by the USAO along with the information and the Waiver of Indictment in the United States District Court for the Middle District of Florids. Tampa Division. WeltCare acknowledges that it has read and understands the assertions contained within the Statement of Facts. WeliCare further acknowledges that it has carefulty considered all of the assertions contained within the Statement of Facts against facts gathered by the Special Committee of WeHCare's Board of Directors during its own independent, internal investigation into the conduct at issue giving rise to this Agreement.

6. Financial Component: WeliCare received approximately $40 miUion in proceeds'

. to which Well Care was not entitled as a result of its conduct under certain Florida Medicaid and Florida Healthy Kids Corporation program contracts. WellCare therefore agrees to pay to the USAO a total of $80 million plus accrued interest, the sum of which represents $40 million in restitution and $40 million in civil forfeiture. The $40 million civil forfeiture will divest WenCare of the proceeds of such Conduct and will be based upon the conduct detailed in the Statement of Feels, which wilt be an exhibit to the civil . forfeiture complaint to be filed pursuant to Title 18t United States Code, Section

981 (a}(1}(C). WellCare further agrees to sign any additional documents necessary to complete the civil forfeiture, including but not limited to a consent to forfeiture. The parties further agree that the $80 million sum will be remitted to the USAO in three

installment payments as follows: "

A. WeliCare shall receive a credit against the $80 million sum of

$35,200,000, which amount was remitted by WellCare to the USAO pursuant to an agreement executed on or about August 18, 2008, by the USAO, WellCare, and other parties. By entering into this Agreement, WeltCare agrees to release any and all claims to any part of the $35,200,000 remitted to the USAO, including any interest earned thereon· after August 18, 2008.

2

Case 8:09~cr~00203~JDW-EAJ Document 4 Filed 05/05/2009 .. Page 3 of 11

B. Within fNe business days of the Effective Date of this OPAl WeJlCare will· make a payment of $25 minion to the USAO, in accordance with wiring instructions to be provided to WellCare by the USAO.

C. WeliCare will make its best effort to pay the balance of the $80 million, or $19.8 million. as soon as possible. In any event. WellCare will pay the $19.8 million to the USAO no later than December 31 t 2009, in accordance with wiring instructions to be provided to WeliCare by the USAO. Further, WeliCare agrees to pay to the USAO interest at a rate of .40% as of the Effective Date of this Agreement until fut! satisfaction of the $19.8 million.

7, Deferral Recommendation: Within five business days of the Effective Date of this DPA. the USAO wlfI recommend to the assigned United States District Court Judge that the prosecution of WellCare on the Information be deferred for the duration of this DPA. Except as otherwise provided for under this DPA, neither the Criminal Division of the USAO nor that component of the Florida Attorney General's Medicaid Fraud Control Unit responsible for investigating and prosecuting violations of Florida crfminal law (hereafter referred to as uMFCU-Criminal Componenr). wiU prosecute WellCare for any of the matters that have been the subject of the USA01s investigation, giving rise to this Agreement.2 In the event that the Court declines to defer prosecutlon for any reason. all charges brought under the charging document will be dlsrnlssed without prejudice and this DPA will be null and void. However. any monies paid to the USAO by WeliCare prior to the date the Court declines to defer prosecution will not be returned to We If Care and WellCare will make no claim upon such monies.

8. Publication: Within five business days of the Effective Date of this OPA,

WeIlCare will prominently post on its website the Information, this DPA., and the Statement of Facts. as referred to above in paragraphs 4 and 5 for the duration of this Agreement. WeUCare agrees that It will not, through its attorneys, agents. officers, directors, trustees, employees, or any other person or vehicle. dlrecdyor indirectly.

make any~ .

(a) public statements.

(b) filings, or

(c) argument in any criminal or civil proceeding brought by the UnIted

States and/or either of the Offices; .

contradicting orunderminlnq any statement or assertion made in this Agreement or Statement of Facts.

2 The matters that have been the subject of the Offices' investigation are specifically identified in a letter between the Offices and WeliCare, dated May 5, 2009.

3

Case 8:09~cr-00203-JDW-EAJ Document 4 Filed 05/05/2009 Page 4 of 17

9. Commitment to Complfance and Remedial Measures: WeliCare commits

itself to exemplary corporate citfzenshipt best practices of effective corporate govemanceJ the highest principles of honesty and professionalism, the integrlty of the operation of all federal and state health care programs including Medtcare and Medicaid, the sanctity of the doctor-patient relationships and a culture of openness, accountability, and compliance, Prior to execution of this OPA, WaUCare will provide a status report to the USAO on all policies and procedures. and all remedial measures. adopted to date by WellCare. To advance and underscore WeliCare's commitment, WeliCare further agrees:

A. To fully cooperate with federal and state law enforcement agencies and federal and state health care regUlatory agencies in matters arising from the Offices' continuing investigation of Individuals responsible for the conduct giving rise to thIs Agreement. However. in accordance with Department of Justice (or "DOJ") pollcles, the Offices wit! not suggest or require that WellCare waive any of WeUCare's legal privileges.

B. To continue to develop and operate an effective corporate compliance and govemance program, including adequate internal controls to prevent recurrence of any of the improper and/or megal activities at issue in the investigation giving rise to this Agreement.

C. To implement, within 60 days of the Effective Date of this DPA. updated policies and procedures designed to ensure complete and accurate reporting of atl federal and state health care program infonnation.

D. To evaluate and revise Wel!Care's internal bid procedures and processes to ensure fair and accurate submission of all data and information ln responses to any government bids and/or any government requests for proposals.

10. Retention of Monitor: By the Effective Date of this DPA or tater as allowed by the

Offices, WeliCare will retain. at its expense, an outside independent individual (the "Monitor") who will be selected by the USAO. consistent with DOJ guidelines. and after consultation with WellCare. in selecting the Monitor, the USAO will engage in a process designed to (a) select a highly qualified and respected person or entity based on suitability for the assignment and all of the circumstances; {b} avoid potential and actual conflicts of interests; and (c) otherwise instill public confidence. WeUCare agrees that it wiU not employ or be affiliated with any selected Monitor for a period of not less than one year from the date the monitorship is terminated.

WeliCare also agrees that if the Monitor resigns or is unable to serve the balance of his or her term, a successor Monitor shall be selected by the USAOJ consistent with

4

Case 8:09~cr-00203-JDW-EAJ Document 4 Fi'led 05/05/2009 Page 5 of 17

DOJ guidelines, and after consultation with WellCars. within forty-five calendar days. WellCare agrees that all provisions in this Agreement that apply to the Monitor shall appJy to any successor Monitor.

11. Duration of the Monftorshig; The duration of the monitorship shall be eighfeen

months from the Effective Date of this DPA.

12. Notification by WellCare to Monitor: WellCare agrees to notify the Monitor and

the USAO of any credible report or evidence of any wrongdoing by Welleare, its officers. employees and/or agents relating to compliance with any federal or state health cere laws, regulations, and/or reporting requirements. At the request of the Monitor or the USAO. WeUCare agrees to provide the Monitor and the USAO with aU relevant nonprivileged information concerning the aflegations and report to the Monitor concerning any investigation It plans to conduct with respect to such evidence and any resulting disciplinary and/or remedial measures. Following completion by WetlCare of its investigation, and in the event the Monitor reasonably concludes that the investigation was incomplete or otherwise deficient. the Monitor will identify to WeUCare any deficiencies in its investigation and anow WenCare 30 days to cure.

13. Role of Monitor. The Monitor shall have access to all non-prtvlleqed Wen Care

documents and !nfannatian the Monitor determines are reasonably necessary to assist in the execution of his or her duties. The Monitor shall have the authority to meet with any officer, employee, or agent of WellCare. The Monitor will undertake to avoid the disruption of WellCare's ordinary business operations or the imposition of unnecessary costs or expenses to WeliCare.

The Monitor shall also, ;nter alia:

A Monitor and review WellCare's compliance with this DPA and aI!' applicable federal and state health care laws. regulations, and programs. Within 30 days of retention. the Monitor shall meet with representatives of WeUCare, the Offices, and the Securities and Exchange Commission' (-SEC"), and thereafter develop a protocol to fully effectuate the Monitor's

obligations herein. '

B. As requested by the Officesl fully cooperate with the Criminal and Civil Divisions of the Offlces,3 the United States Department of Justice Criminal and Civil Divisions, the FBlt the HHS·'(HG, and the SEC, and, as requested by the USAO} provide information about WellCare's compliance with the terms ofthis OPA.

3 Specifically including the MFCU-Criminal Component. 5

.:

..

Case 8:09-cr-00203-JOW-EAJ Document 4

-

Filed 05/05/2009 Page 6 of 17

C. Provide a total of three written reports to the USAOj that is one report every six months for the duration of the rnonltorshlp, as detailed more fully below in paragraph 14.

D. Immediately report the following types of misconduct directly to the USAO and not to WeliCare: (1) any misconduct that poses a significant risk to public health or safetyi4 (2) any misconduct that involves senior management of WellCare; (3) any misconduct that involves obstruction of justice; (4) any misconduct that involves a violation of any federal or state criminal statute, or otherwise Involves criminal activity, or (5) any misconduct that otherwise poses a significant risk of harm to any person or to any federal or state entity or program, On the other hand, in instances where the allegations of misconduct are not credible or involve actions of individuals outside the scope of Wefleare's business operations, the Monitor may decide. in the exercise of his or her discretion, that the allegations need not be reported directly to the USAO.

E. lmrnedlately review and evaluate- policies and procedures relating to the topics described below, and make written recommendations as necessary to WellCare conceming:

i.

The efficacy of poticles and procedures relating to fairly, truthfully, and accurately accounting for and reporting of all revenues and/or expenditures and/or costs incurred in providing any services to federaf and state health care program beneficiaries •.

ll.. The efficacy of poliCies and procedures relating to true, accurate, and complete documentation of medical records pertinent to any health care services furnished by WelJCare to federal and state health care program beneficiaries.

iii. The efficacy of policies and procedures relating to the submission of true, accurate, and complete claims for payment to all federal and state health care programs. including the Medicare, Medlcald, and Florida Healthy Kids Corporation programs.

iv. The efficacy of policies and procedures relating to the fair. truthfult and accurate preparation, certification, and submIssion of bids to all federal and state health care.

4 The USAO win determine whether to also Immediately report said misconduct to WeUCare.

6

Case 8:(]9-c~-00203-JDW-EAJ Document 4 Filed 05/05/2009 Page 7 of 17

programs, including the Medicare. Medicaid, and the Florida Healthy Kids Corporation programs,

v. The efficacy of training refating to the above topics, and on the obligation of each WeUCare employee to ensure that, in dealing with all federal and state health care programs, any Information provided to the health care programs Is true, accurate, complete, and transparent.

WeHCare shall adopt all recommendations submitted to WeliCare by the Monitor, unless WellCare objects to the recommendation. In that event, WelfCare and the Monitor may present the issue to the USAO for its consideration and final decision, which is non-appealable.

14. Monitor's Reports: EVeI)' six months during the term of this DPA, the Monitor will

prepare in writing a Monitor's Report to the senior management of WenCare and the Board of Directors, with a copy to the USAO. The first Monitor's Report to the USAO shall be due six months after the Effective Date of this Agreement.

The Monitor's Report shall address the following; (a) WellCare's compliance with this Agreement and all applicable federal and state health care laws; regulations; and programs; (b) a summary of the Monitor's recommendations to WeUCare during the reporting period concerning the topics identified in paragraph 13(E)(f-v) above. and WellCare's responses and/or performance in implementing the Monitor's recommendations; and (c) any other relevant information that the Monltor deems necessary to further the Monitor's obligations under this Agreement.

The Monitor's Report to the USAO shall not be received or reviewed by We!lCara prior to submission to the USAO. The Monitor's Report will be preliminary until WeliCare is given the opportunity, within ten calendar days after the submission of the Monitor·s Report to the USAO, to comment to the Monitor and the USAO in writing upon such Report, and the Monitor has reviewed and provided to the USAO a response to such comments, upon which such Report shall be considered final.

WellCara agrees that the Monitor may disclose the Monitor's Report(s), as directed by the USAO, to any ather federal and/or state law enforcement or regulatory. agency in furtherance of an investigation of any other matters discovered by. or brought to the attention of, the USAO in connection with the USAO's continuing investigation or the imptementation of this DPA, ln such event, WeliCare may identify any trade secret or proprietary information contained in any Monitor's Report, and request that the Monitor redact such information prior to disclosure. The Monitor shaH fairly and in good faith consider WeUCare's request to redact any information. However. the Monitor"s decision, which is non-appealable. shan be based upon the Monitor'$ overarching obligations as set forth in this Agreement.

7

Ca.se 8:09-cr-00203-JDW-EAJ Document 4 Filed 05/05/2009 Page 8 of 17

15.· Additional Coogeration of Well Care: Wenears acknowledges and understands that its future cooperation is an important factor in the decision of the Offices to enter into this DP~ and Weneare agrees to continue to cooperate fully with the Offices,

and with any other government agency designated by the USAO. regarding

any issue about which Weneare has knowledge or information with respect to compliance with federal and state health care laws. More specifically. Wellears agrees that, during the term of this DPA, WeliCare will:

A. Consent to any order sought by the USAO permitting disclosure to the Civil Division of the United States DOJ of materials relating to ccmpllance with federal health care laws that constitute "matters before the grand jury" within the meaning of Federal Rule of Criminal Procedure 6(e) (with protection for any trade secrets).

B. Take reasonable steps to make avallable current WellCare officers and employees to provide information and/or testimony at reasonable times as requested by the Offices, with respect to matters that have been the subject of the Offices' investigation leading to this DPA. WenCare will not be required to request that these individuals forgo seeking the advice of an attorney or act contrary to that advice.

C. Disclose all non-privileqed information about which the Offices may inquire with respect to matiers that have been the subject of the

Offices's investigation feading to this D?A. .

D. Provide prompt, complete and truthful testimony. certifications, and/or other non-privileged lnformatlon, as required by the Offices. necessary to identify or establish the location, authenticity or

evidentiary foundation to admit into evidence documents in a .

criminal or other proceeding relati~g to matters that have been the subject

of the Offices' investigation leading to this DPA ..

16. Breach of Agreement

A. Should WeflCare commit a health care offense in violation of federal and/ar state criminal law subsequent to the effective date of this DPA, WeUCare wlU immediately and without notice be subject to federal and/or state prosecution, and WellCare will be in material breach of the D?A.

B. Otherwise I should the USAO determine that WeUCare has knowingly and willfully breached a material provision of this DPA. the USAO will provide WeliCare with written notice of the alleged breach. WeliCare will have 30 days following receipt of such notice. or such longer period as the parties

Case 8:09-cr·00203~JDW-EAJ Document 4 Filed 05/05/2009 Page 9 of 17

may agree, to demonstrate that no breach occurred, that the breach was not material, or that the breach was not knowingly and willfully committed.

C. [f thEa USAO, in its sole discretion. determines:

(i) That WeflCare has materially breached this DPA in the manner described above in paragraph A of this section, Qt

(ii) That WetlCare has knowingly and willfully breached a material provision of this DPA in the manner described above in paragraph B of this section after WelrCare has had the opportunity to demonstrate that no breach occurred, that the breach was not material. or that the breach was not knowingly and willfully committed,

then the USAO may proceed with the prosecution of WellCare through the filed Information or otherwise, as detennined solely by the USAO.

Further, the USAO may utHize the Statement of Facts, referred to above in paragraph 5, in any such prosecution. Should there be a prosecution In accordance with this Agreement. WellCare agrees that upon such prosecution: (1) WeUCare, through its attorneys, agents. officers, directors, trustees. employees, or any other person or vehicle, wiD not refute in any way or manner, directly or indirectly. any of the assertions contained within the Statement of Facts; (2) WellCare and its counsel will stipulate that the Statement of Facts is admissible in any such prosecution as evidence against WenCare pursuant to Federal Rule of Evidence

801 (d)(2)(A).(B),(C). and (D); (3) WeUCare and its counsel will stipulate that the Statement of Facts is true and correct and that the Statement of Facts may be read to the jury or other fact-finder in whole or in part, as elected by the USAO. as a stipulation to which the parties have agreed; and (4) the admissibility of the Statement of Facts Is not barred or

prohibited in any way or manner by the Federal Rules of Evidence, .

specifically includIng Federal Rule of Evidence 410, by the Federal Rules of Criminal Procedure. specifically Including Rule 11, or by any other means. Nothing in this paragraph shall be construed as an acknowfedgment that this Agreement and/or the Statement of Facts are admissible or may be used in any proceeding other than a proceeding· brought by the Offices following a breach as described in this paragraph

1a .

D. Regardless of whether the USAO pursues criminal charges against WeUCare upon any breach of the OPAl any monies paid to the USAO at any time by WeUCare will not be returned to WellCare and WeliCare wlll . make no claim upon such monies.

9

Case 8:09-cr~00203"JDW-EAJ Document 4 Filed 05/05/2009 Page 10 of 17 .

E. All parties agree and acknowledge that, except in the case of a material breach of this DPA, aU investigations of WeUCare relating to the filed lntormatlon, and to all other matters that have been investigated by the USAO prior to the date of this DPAI will not be pursued further as to WeliCare by the USAO Criminal Division nor by that component of the Florida Attomey GeneralIs Medicaid Fraud Control Unit responsibfe for investigating and prosecuting violations of Florida criminallawt5 but wHl continue as to any and aU individuals bearing responsibility for any violations of federal and/or state health care laws. Nothing in this paragraph is to be read or construed as stating. suggesting, or implying that this DPA in any way limits the ongoing investigations being conducted by the Offices' Civil Divisions and/or components, the Civil Division of the DOJ. or any other federal or state office. agenCYJ or department.

11. ToHlng Agreement. Waivers and Umitations:

Well Care expressly waives al\ rights to a speedy trial pursuant to the Sixth Amendment of the United States Constitution, Title 18. United States Cede, Section 3161, Federal Rule of Criminaf Procedure 48(b)1 and any applicable Rules of The District Court of The United States For The Middle District of Florida, and pursuant to Rule 3.191, FLA. R. CRIM. P'I. for the period that this DPA is in effect for any prosecution of Well Care.

The parties agree that any statutes of nmitations applicable to the Offices' investigation leading to this Agreement shall be tolled as of the Effective Date of this Agreement, and that WellCare hereby waives any and all rights to claim the period between the Effective Date of this Agreement and any prosecution brought by the USAO pursuant to paragraph 16 of this Agreement, as a bar to prosecution, tn any claim that the statute of limitations has expired for offenses charged against WellCare related to the subject matter of the investigation gi\~ng rise to this Agreement The subjects covered by the tolling of the applicable statutes of limitations include any and an alleged violations of any Tltle of the United States Code. specifically including any and all alleged violations of Title 18 involving WellCare that are within the scope of said investigation.

This waiver is knowing and voluntary and in express reliance on the advice of counsel. Any such waiver shan terminate upon flnal expiration of this DPA.

5 The matters that have been the subject of the Offices' investigation are specifically identified in a letter between the Offices and WeliCarel dated May 5. 2009.

10

Case 8:09-cr-00203-JOW-EAJ Document 4 Flied 05/05/2009 Page 11 of 17

18. No Sale or Transfer of WellCare Prior to Full Satisfaction of the Financial

Component: Prior to full satisfaction of the Financial Component of thIs Agreement as described in paragraph 6 above. WelfCare agrees that it will not selt all or substantiaHy aU of WeHCarefs business operations as they exist as of the Effectfva Date of thIs Agreement to a single purchaser or group of affitlated purchasers during the term of this Agreement. or merge with a third party in a transaction in which WellCare is not the surviving entity, without the express written permission of the Offices .

. 19. Transferability of DPA: Absent the express written consent of the Offices

to conduct itself otherwise, WeliCare agrees that If. after the Effective Date of this Agreement, WellCare sells all or substantially all of WenCare's business operations as they exist as of the Effective Date of this Agreement to a single purchaser or group of affiliated purchasers during the term of this Agreement, or merges with a third party in a transaction in which WellCare is not the surviving entity, WeJlCare shall include in any contract for such sale or merger a provision binding the purchaser. successor, or surviving entity to the obligations contained In this Agreement.

20. Other Proceedings:

A. Well Care specifically agrees that this DPA in no way restricts the ability of the USAO or the MFCU-Criminal Component from proceeding against any indIvidual in any capacity,

B. WeJlCare also specifically agrees that this DPA in no way limits or precludes the United States and/or either of the Offices from instituting. maintaining. or intervening in any action or other proceeding to recover any civil or administrative monetary or other remedy or penalty.

21. Dismissaf of Charging Document: The Offices agree that if WeBCare has

complied with this DPA, within 5 days of the expiration of the DPA, the USAO win seek dismissal with prejudice of the information filed pursuant to paragraph 4 above.

22. Expressed Limitation of the Agreement: The agreement between the parties .

expressed in this DPA In no way limits or waives WellCare's contractual obligations to any federal or state health care agency or program, except as expressly provided herein.

11

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Case 8:09-cr-00203-JDW-EAJ Document 4 Filed 05/05/2009 Page 12 of 17

23\ Entire Agreement: This DPA constitutes the fulf and cornpleteaqreemant

between WeliGare and the Offices and supersedes any previous agreement betweBrr , them . No additional promises, agreements, of conditions have been entered into ether' , than those set forth ln this DPA,and none will be entered into unless In writing and: ' signed by the Offices, WellCare counsel; and a duly authorized representative of VVeUCare. It is understood that the Offices lTIay permit exceptions to or excuse

particular requirements 'set forth' in this PPAat thewritterrrequest ofWeliCar~drthe?

Mdnltdc bMt any such permisslcihshaUp~ nt writing. '

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,AGREEU&.AOCEFfED BY:!'

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GRt:GORYW. KEHOE"kSQ."

Greenber~rTraurig~ p:~' ,." .'

Attorney for WeUCaffi;' He?ltt'i Pt~n'S.¥rl1At

JHOMASF,'O'NjElt1ltt·

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'Scon Ff\RR Reglon_al Chief .

Qffi'be of Att~r6e¥(3.~ng.r~t

Case 8:09-cr-00203-JDW-EAJ Document 4

Filed 05/05/2009 Page 13 of 17

23. EnUre Agreement: This DPA constitutes the fun and complete agreement

between WellCare and the Offices and supersedes any previous agreement between them. No additional promises, agreements, or condItions have been entered Into other than those set forth in this DPA., and none wi\! be entered into un\ess in writing and signed by the Offices, WellCare counsel, .and a duty au!hortzed representative of WelfCare. It is understood Ihal the Offices may permit exceptions to or excuse particular requirements set forth In this DPA at the written request of WeHCare or the Manllor, but any such permission shall be in writing.

AGREED & ACCEPTED BY:

WELLCARE HEALTH PLANS, INC.

. .'

UNITED STATES OF AMERICA A BRIAN Al6RITION

UnIted Slates Attorney

Middle District of Florida

JAY G. TREZEVANT

ASSistant United States Attorney Middle District of Florida

ANTHONY E. PORCELLI Ass!stant United States Atlorney Middle District of Florida

STATE OF FLORlDA

SCOTTFARR Regionaf Chief

Office of Attorney General

12

Case 8:09-cr:b0203-JOW-EAJ Document 4 Filed 05/05/2009 Page 14 af 17

DIRECTOR"S CERTIFICATE

I have read thIs agreement and carefully reviewed every part Of ft with counsel for

WellCare. I understand the terms of this Deferred Prosecution Agreement and .

voluntarily agree, on behalf of WellCare, to each of the terms. Before signing this Deferred Prosecution Agreement, f consulted with the attorneys forWeUCare.Counset funy advised me of WeUCare's rights, of possible defenses, of fue Sentencing Guidelines' provisions, and of the consequences of entering into this Deferred Prosecution Agreement No promises or inducements have been made other than those contained in this Deferred Prosecution Agreement Furthermore. no one has threatened or forced me, or to my knowledge any person authorizing this Deferred Prosecution Agreement on behalf of WeUCare. in any way to enter into this

Deferrad Prosecution Agreement I am also satisfied with counsers representation in this matter, J certify that I am a director of WetiCare, and that I have been duly authorized by the Board of Directors of WeUCare to execute this certificate on behalf of we-nears.

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Exeoutive Chai an of the Board of Directors wallCare Health Plans. Inc.

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Case 8:09~cr-00203-JDW·EAJ Document 4

Filed 05/05/2009 Page 15 of 17

CERTIFICATE OF COUNSEL.

I am counsel for Wel!Care. In connection with such representation, i have examined relevant WeliCere documents, and have discussed this Deferred Prosecution Agreement with the auUlorized representative oC WellCare. eased on my review of !he foregoing materials and discussions, I am of the opinIon that

t, The undersigned counsel IS duo/ authorized to enter tnto this Deferred Prosecution Agreement on behalf of WeliCare; and

2, This Deferred Prosecution Agreement has been duly and validly authorized, executed and delivered on behalf of WeUCare, and is a valid and b!nding obHgation of Well Care. Further. I have carefully reviewed every part of this Deferred Prosecution Agreement with the Directors of We!lCar&. ! have fully advised these DIrectors of WenCare's rights, of possible defenses, of the Sentencing Guidelines' provisions, and of the consequences of entering into this Agreement. To my knowledge, WeflCare's decision to. enter Inlo this Agreement is an informed and voluntary one.

Case 8:09~cr-00203-JDW-EAJ Document 4 Fired 05/05/2009 Page 16 of 17--

SECRETARY'S CERTIFICATION

,. THOMAS F. O'NEIL'lIt the duty elected Secretary ofWeUCare, 61 corporation dul}P brganized under the laws of the State of Florida, hereby cenify tha~ the f9Howlng is ~'. true and exact copy of a resolution approved by the Board of Diredors of WeHCare . following a meeting of the Board;

WHEREAS, WellCare has been eng'aged in discussions wtth_ th~ US.AO-MPFtlrl' connection with an Investlqatlon being conducted by the USAO-MDFL;. . .

'WHEREAS. the Board of Qlrectors of Well Care cdnsentstotesotution of these. discussions on behalf of WeUCate by en~ering into this Deferred ProsecutlonAgreem$l1fi' that trie Board of Directorshasreviewed'wlth outside counsel representing WeUCaref:'

NQW THEREFORE, BE !TRESOLVgD thaf outside counsel representlngWetlCaren: from Greenberg Traudgl p.A. be, and theyhereby are authorized to.execute the .,' Deferi~d PrdsecutlohAgree~enf 0(\ qefialf of WeHCflre substantH3H¥ in tne. s~meJqfiti_.·~ . as reviewed by the Board of Dlrectorsderlng 13- meeti'n-gof theB'card,ahd that a: DireCf6t,

. of WeUCareis authorized to,Bxecute th~ Q.ireclor'$ C$rtiiicaie fot: the Q.eferh3d .

'Prosecution.Agreement-'· ., ."" .' .,' _._ '.' "., '.

!:f\lW1Tl\!::E~SyvHEREOF! 'f b~ye;h$~nt~~I~h~P::rn~na.m~ ~$$eQf$iaJry ~nd' affixed' t!?'~ S€l_a;tofpa!<f COmor?tlqn mlS% .. ·~·a}fplJ~ay\2Qg~2

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Case 8:09~cr~00203~JDW-EAJ Document 4 Filed 05/05/2009 Page 17 of 17

CERTIFIED COpy OF RESOLUTION

Upon motion duly made, seconded, and carried by the affirmative vote of all the Directors present, with one abstaining. the following resolutions were adopted:

WHEREAS, WeliCare has been engaged in discussions with the United States Attorney's Office for the Middle District of Florida ("USAO-MDFL H) in connection with an investigation being conducted by the USAO~MDFL;

WHEREAS, the Board of WellCare consents to resolution of these discussions by entering into a deferred prosecution agreement that the WenCare Board of Directors has reviewed with outside counsel representing Well Care;

NOW THEREFORE. BE IT RESOLVED that outside counsel representing WeliCare from Greenberg Traurig, P.A. be, and they hereby eret authorized to execute the Deferred Prosecution Agreement on behalf of WeUCarec substantially in the same form as reviewed by the WeUCare Board of Directors during a meeting of the Board, and that a Director of WellCare is authorized to execute the Directors Certificate for the Deferred Prosecution Agreement

Case 8:09~cr-00203-JDW-EAJ Document 4-2 Fi!~d 05/05/2009 Page 1 of 12

ATTACHMENT A

a ,

Case 8:09-cr-00203-JDW-EAJ Document 4-2 F1!ed 05/05/2009. Page 2 of 12

UNITED STATES DiSTRICT COURT MIDDLE DISTRICT OF FLORIDA TAMPA DIVISION

UNITED STATES OF AMERiCA

v.

CASE NO. 8:09-cr4

WELLCARE HEALTH PLANS, INC -.

STATEMENT OF FACTS

1, Beginning in or about mid-2002. and continuing through at least October 2001, within the Middle Distriot of Florida, and elsewhere, WELLCARE HEALTH PLANS, INC. (formerly doing business as Wellcare Holdings, LLC •. , and also known as WCG Health Management, Inc" referred to herein as "WELLCARE~). acting through its former officers and employees. knowingly and willfully conspired, confederated and agreed with others to execute and attempt to execute a scheme and artifice to defraud two health care benefit programs: the Florida Medicaid program and the Florida

Healthy Kids Corporation ("FHKC1f) program. Additionally. WELL CARE knowingly and willfully conspired, confederated and agreed with others to defraud the Florida Medicaid program of approximately $33,649~553 and the FHKO program of approximately $6,395,500 by means of materiaUy false pretenses, representations. and promises in connecnon with the delivery of and payment for health care benefits, items, and

services.

Case 8:09~cr-00203-JDW~EAJ Document 4-2 Filed 05/05/2009 Page 3 of 12

The Florida Medicaid Program

2. The Medicaid program, as established by Title XIX of the Sodal Security

Act and Title 42 of the Code of Federal Regulations, authorized Federal grants to States for medical assistance to low-income persons who are blind, disabled. or members of families with dependent children or qualified pregnant women or children (herein

referred to as ·'Medicaid beneficiaries» or "Medicaid reclplents"), The Centers for Medicare and Medicaid Services (~CMS"), previously known as the Health Care Finance Administration ("HCFA"). was an agency of the Unlted States Department of Health and . Human Services ("HHS"). and was the federal governmental body respcnslble for the administration of the Medicaid program. eMSI in tum. authorized each state to

establish a state agency to oversee the Medicaid program.

3. The Florida Medicaid program was authorized by Chapter 409r Florida Statutes. and Chapter 59Gt Florida Administrative Code. Florida further established the Agency for Health Care Administration (uAHCA") as the single state agency authorized to administer the Florida Medicaid program.

4. States electing to participate in the Medicaid program had to comply with the requirements imposed by the Social Security Act and regulations of the Secretary of HHS.

5. The federal government reimbursed states for a portion of the states' Medicaid expenditures based on a formula tied to the per capita income in each state. The federal share of Medicaid expenditures (otherwise referred to as "federal financial participation" or "FFP") varied from a minimum of 50% to as much as 83%, of a state's total Medicaid expenditures. The federal govemment's 'financial participation" In the

2

Case 8:09-cr~00203-JDW~EAJ Document 4·2 Filed 05/05/2009 Page 4 of 12

Florida Medicaid program equaled approximately 59% of Florida's total Medicaid

expenditures.

6. The Florida Medicaid program reimbursed health care practitioners, healthcare facUlties, or health care plans that met the conditions of participation and eligibUlty requirements and that were enrolled in Medicaid for rendering Medicaid:" covered services to Medicaid beneficiaries.

7. "Capitation reimbursement" was one of several ways that the Florida Medicaid program reimbursed health care providers, including health maintenance organizations ("HMOs") such as WElLCARE. nCapitation reimbursement" was a form of payment where HMOs and other providers were paId a fixed amount each month for each

. beneficiary or member (per caplta) enrolled to receive services from that HMO or

provider.

8. Florida sought to provide certain behavioral health care services to the Florida Medicaid program beneficiaries! and in 2002 enacted Florida Statute 409.912(4)(b), which provided. in pertinent part:

To ensure unimpaired access to behavioral health care services by Medicaid. recipients; all contracts issued pursuant to this paragraph shall require 80 percent of the capitation paid to the managed care plant including health maintenance organizations I to be expended for the provision of behavioral health care services. In the event the

managed care plan expends less than 80 percent of the capitation paid pursuant to this p~ragraph for the provision of behavioral health care services; the difference shall be returned to the agency.

Beginning in or about mid-2002. AHCA began covering certain behavioral health care services, and it provided these services through contracts with HMOs, such as

3

Case 8:09-cr-00203-JDW-EAJ Document 4-2 Filed 05/05/2009 Page 5 of 12

WELLCARE, which included provisions for the new services to be delivered to the Florida Medicaid program beneficiaries and reimbursed through a capitated payment. arrangement.

The Florida Healthy Kids Corporation Program

9. The. FHKC program contracted with licensed managed care organizations and health insurance entities to extend affordable, accessible, quality health care to the qualifying population of uninsured children in families with incomes too high to qualify for the Florida Medicaid program, but too low to afford private health insurance.

10. Title XXI of the S·ocial Se~urlty Act and Title 42 of the Code of Federal Regulations authorized the creation of the FHKC program. and r=torida created FHKC as a not-tor-proflt corporation pursuant to Sectlon 624.91, Florida Statutes. FHKC was funded through a combination of state and federal funds under the State Children's Health Insurance Program as described in Title XXI of the Social Security Act ..

WElLCARE's "80/20" Contracts with AHCA

11. WELlCARE, a Delaware entity, acted ~hrough its subsidiaries to provide .. managed health care services primarily for govemment-spcinsored health care

, '

programs such as Mec:ficaid·and Medicare. Among other business actiVities;

, WELLCARE provided Medicaid services in a number of states. including Florida. The Medicaid program for each state paid WELlCARE for the managed care services provided to Medicaid beneficiaries residing in that state.

12. WELL CARE was one of the largest providers of managed care servlces in Florida, and it enrolled Medicaid patients into one of its two.plans: Wellcare of Florida,

4

Case 8:09-cr-00203-JDW-EAJ Document 4-2 .:~ Fired 05/05/2009 Page 6 of 12

Inc, (formerly known as. Well Care HMO, lnc., and doing busIness as StayWeli Health Plan of Florida. referred to herein as "STA VW:ELL") and Healthease of Frorida, Inc .

. (~HEAL THEASE"). Both 8T A YWELL and HEAL THEASE were wholly-owned subsidiaries of WELL CARE and legal entiti$s created under Florida taw. As noted above, AHCA was the agency charged with administering the Ronda Medicaid program •

. ; _,;"

13. To govern aspects of the prcvisionct additional Florida Medicaid prbgram .. services, that is, certain behavioral health care services, to Florida Medicaid

beneficiaries. Florida Statute 409.912(4)(b) was enacted, effective June 7, 2002, which

read, in pertinent part:

To ensure unimpaired access to behavioral health care services by Medicaid recipients. all contracts issued

pursuant to this paragraph shall require 80 percent of the capitation paid to the managed care plan. including health maintenance organizations, to be expended for the provision of behavioral health care services. 11'1 the event the

managed care plan expends less than 80 percent of the capitation paid pursuant to this paragraph for the provision of behavioral health care services, the difference shall be returned to the agency .

. . 14. . Thus, beginning in cr about mid~20021 AHCAbegan covering the· behavioral health care services, via contracts which included provisions for the new services to be deUvered to Florida Medicaid beneficiaries through a capitated arrangement. WELLCARE~ through its STAYWELL and HEALTHEASE plans. contracted with AHCA to provide a variety of services to Florida Medicaid beneficiaries, including community behavioral health services (also sometimes referred to as "mental health services"). The contracts between AHCA and STA YWELL and HEAL THEASE

5

~. T

Case 8:09~cr-00203-JDW$EAJ Document 4-2 Filed 05/05/2009 Page 7 of 12

. provided that STAYWELL and HEAL THEASE were paid on a fiat or "capitated"rate for each beneficiary or member enrolled in one of the two health plans. The capltated rate varied depending on age, sex, geoQraphic location, and other factors. Per the relevant AHCA contracts' provisions relating to community behavioral health services and in accordance with Florida law, STA YWELL and HEAL THEASE were allowed. to retain . 20% of the related premiums received from AHCA to cover their administrative expenses and overhead. As to the remaining 80% of the premiums received from AHCA, both the contracts and Florida taw required that any funds not expended by STA YWELL or HEAL THEASE or paid directly or indirectly to C9mmunity behavioral health services providers solely for the provision of those services had to be returned to the state (these AHCA contracts which includ.ed such 80/20 provisions are. referred to herein as "80/20 contracts").

15. The AHCA 80120 contracts included language Identical, or substantially similarl to the foflowing:

Community Behavioral Health Services Annual 80/20 Expenditure Report. i.By April 1 of each year, Health Plans shall provide a

breakdown of expenditures related to the provision of

community behavioral health services, using the

spreadsheet template provided by the Agency (see

Section XII, Reporting Requirements). In accordance

with secncn 409.9121 F.S., eighty percent (80%) of

the Capitation Rate paid to the Health Plan by the

Agency shall be expended for the provision of

community behavioral health services. In the event

the Health Plan expends less than eighty percent

(80%) of the Capitation Ratet the Health Plan shall

return the difference to the Agency no later than May

1 of each year.

6

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Case 8:09;cr-00203-JDW-EAJ

Document 4-2

Filed 05/05/2009

Page 8 of12

For reporting purposes in accordance with this Section, 'community behavioral health servlces' are defined as those services that the Health Plan is required to provide as fisted in th e Community Mental Health Services Coverage and Limitations Handbook and the Mental Health Targeted Case Management Coverage and Limitations handbook.

b. For reporting purposes hi accordance . with the Section texpended' means the total amount, In dollars, paid directly or

. indirectly to community behavioral health services providers solely for the provlsion of community behavioral health services, not including administrative expenses or overhead of· the plan. If the report indicates that a portIon of the capitation payment is to be returned to the Agency, the Health Pian shall submit a check for that amount with the Behavioral Health

. Services Annual 80/20 Expenditure Report that the Health Plan provides to

the Agency.D .

a.

16. To facilitate the required reporting of expenditures relating to the provision of the community behavioral health care services, AHCA provided each participating health plan in Rorida. including STAYWELt and HEALTHEASE. with a worksheet titled '!Fina"ncial Worksheet For Benavioral Healthcere," or other similar title (such worksheet is referred to herein as "AHCA Behavioral Healthcsre Worksheef'). that was organized In a manner to calculate and present to AHCA the amount of refund, if any. due AHCA

. under the relevant 80/20 contracts.

17. The AHCA Behavioral Healthcare Worksheet required. in part. each partIcipating health plan, ino1uding STA YWELL and HEAL THEASE1 to provide AHCA

7

Case 8:09-cr-00203-JDW-EAJ Document 4-2 Filed 05/05/2009 Page 9 of 12 -,

with the plan's true and correct expenditure information relating to the plan's provision of behavioral health care services. '1 Behavioral health care servlces" was defined as those

services that the plan was required to provide per the Community Mental Health Services Coverage and Limitations Handbook and the Mental Health Targeted Case Management Coverage and limitations handbook.

WELLCARE's FHKC Program Contracts 18. Florida Statute 624.91(10) authorized the FHKC to:

[c}ontract with authorized insurers or any provider of health care services. meeting standards established by the [FHKC}. for the provision of comprehensive insurance coverage to participants. Such standards shall Include criteria under which the [FHKCl may contract with more than one provider of health care services in program sites. Health plans shall be selected through a competitive bid process. The [FHKC] shall purchase goods and services In the most cost-effective manner consistent with the delivery of quality medical care. The maximum administrative cost for a [FHKCJ contract shall be 15 percent. For health care contracts, the minimum medical loss ratio for a [FHKC] contract shall be 85 percent

19. Since in or about Octoher 2003, WELLCARE. through its STAYWELL and HEALTHEASE plans. contracted with the FHKC to provide insurance coverage to FHKC

> •

participants.

20, ln accordance with Florida Statute 624.91(10), the relevant contracts

. .

. between the FHKC and the WELLCARE entities STAYWELL and HEALTHEASE

included a provision that established a medical loss ratio ("MLR1t) of 85% which required STAYWELL and HEALTHEASE to return to the FHKC one-half of the difference

between the 85% MLR and the actual loss ratio experienced by STAYWELL and HEAL THEASE in providing the covered services. For example. th~ contract between

8

Case 8:09-cr-00203-JDW-EAJ Document 4-2 Filed 05/05/2009 Page 10 of12

FHKC and the WELLCARE entities STA YWELL and HEAL THEASE for the period beginning in October. 2005. read, in pertinent part:

In the event that the medical loss ratio for this Agreement is better than eighty-five percent (85%) tn the aggregate for both [STAYWELL] and HEAL THE.ASE calculated in the ' same manner as the premium development and allocation methodology utlltzed in the [WELLCARE's] original rata proposal in its response to the RFP i [WELLCARE1 shall share equany with [FHKCl the dollar difference between the actual loss ratio for said period and the predicted eighty-five percent (85%).

, {WELLCARE] shall provide annually [FHKC] with a written copy of its findings each year during the term of this Agreement by February 1 st If any payments are due under ., this provision, [WELLCARE} shall forward such payment with its written notification. [WELLGAREJ may be subject to audit or verifiqation [FHKCl Of its designated agents.

The Conspiracy

21. WELLCARE. through its former officers .and employees, conspired to defraud the Florida Medicaid program and the FHKC program. It was part of the

conspiracy that

(a) to fraudulently reduce WELLCAREs contractual payback obligations to ' .

AHCAunder the 80120 contracts and to the FHKC program, under its relevant contracts, and thereby correspondingly benefit WELLCARE through an increase in profits. WELLCARE, acting through its former officers and employees, would and did falsely and fraudulently inflate medical expenditure information reported to AHCA and to the FHKC program concerning WELLCAREts STA YWELL and

HEAL THEASE plans through various acts and strategies includingt but not limited to:

9

Case 8:09~cr-(j0203~JDW-EAJ Document 4-2 Filed 05/05/2009 Page 11 of 12

i. falsely and fraudulently including expenses in the relevant

AHCA Behavioral Healthcare Worksheets for WELLCARE plans STA YWELL and HEAL THEASE that were not expenses incurred by the plans in providing the required community behavioral health services as defined and listed in the Community Mental Health Services Coverage and Limitations Handbook and the Mental Health Targeted Case Management Coverage and Limitations handbook;

ii. falsely and fraudulently including expenses in calculating the actual loss ratio reported by STA YWELL and HEAL THEASE to the FHKC program;

m. using a wholly-owned entity named Harmony Behavioral Health, Inc. (formerly known as Weflcare Behavioral Health! Inc.), to conceal and falsely and fraudulently inflate tha STA YWELL and HEALTHEASE plans' true and actual expenses incurred in providing the required certain medical services to Florida Medicaid and FHKC program recipients; and

lv, submitting false and fraudulent AHCA Behavioral Healthcare

Worksheets to AHCA.

(b) to conceal WELlCARE's false and fraudulent reporting of expenditure

information to AHCA, WELLCARE, through Its former officers and employees, acting within the scope of their duties and authorities. would and did falsely and

. fraudulently provide certified Medicaid behavioral health encounter data to AHcA. Generally. "behavioral health enpqunter data" referred to the actual' cost or expense of providing a particular behavioral health service; or in other words, "behavioral health encounter data" is the relevant data that details what specifiC

services were performed and how much each service cost.

10

Case 8:09-cr-00203-JDW-EAJ Document 4-2 FHed 05/05/2009 Page 12 of 12

.&p:i: WEltCA~'Ei~'former'O;fflcers antf:empibyees, acting wlthfn th.9:~$9;jJ?~:p.i theitdudss and' aathodtlBs,,"Yo111dahd :cnd engage in rneetfngsan&ot"her:'cbndtidt>

, ." .' ." " . - '.' :~., .

. Jt!F{a conG~rfed andorganlzed effort to concealand cover-up the false 'arrd> f'f:~dd~renr~~tur~":';of'V(t~LlCARE's:vadO:ill~expeo:dltury informaUom:'artd' ·$hcsiunt~r:d:~.~t{:.~D6:ttlt$Si6ri$·t~.AH~~"

'Anthony . Po celli TI:~tJrj~ep State,s I't~·

.~\j_

, ,:' " . ", ... - -r: _" - ~

. Robert T. Monk::""" . .

. Deput(CNefl. Eb'qn{5~c¢ijtnes·~:~4~~it. A~sistailit Un#~d.:.Stafe~ Attome~

APPENDIX EXHIBITD

COHEN, FOSTER

ROMINE, P.A.

----------~-----------

TRIAL ATTORNEYS

June 30, 2010

Attorney General Bill McCollum, Office of Attorney General ' The Capitol

Tallahassee, Florida 32399-1750

Re: Preliminary Settlel11ent-

United States of America ex rel, Sean Hellein v. WellCare Health Plans, Inc. Case No: 8:06-CY-OI079-T-30TGW

United States of America v. WeflCare Health Plans, Inc. Case No: 8:09-00203-T-27EAS'

Dear Attorney General McCollum,

According to the Department of Justice; your agency has agreed to a settlement which is not consistent with the best interest of the taxpayers of your state. As an erected official, I think it is responsible, prudent and consistent with your obligation as, Attorney General to satisfy yourself of a decision by your office which should be reviewed by you so that you have full knowledge of ail the relevant facts and will accept responsibility for YO"Qr . agency's decision.

Enclosed you will find a copy of our complaint which is self-explanatory. Donna Rohwer is the agent in your office who has knowledge of this matter and apparently has advised the Department of Justice of the acquiescence of you I" agency to the present proposed preliminary settlement. Such an agreement potentially has adverse financial ramifications for your state and should be reviewed by you personally. I'm sure the citizens of your State are entitled to know more and would expect no less out of you.

BAC/rws

201 E. Kennedy Blvd. a Suite 1000 .. Tampa FL 33602 .. leI: 813,225,1655 '_ Fax: 813.225.1921

APPENDIX COMPOSITE EXHIBITE

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