WellCare Health Plans Inc. will pay $80 million to settle a Florida Medicaid fraud investigation. A management shake-up and the restatement of more than three years of the company’s earnings also resulted from the probe. The settlement resolves federal and state criminal investigations into allegations that WellCare defrauded Florida benefits programs for low-income adults and children of about $40 million by improperly inflating what it spent on care. WellCare, based in Tampa, Florida, administers medical benefits for about 2.5 million enrollees in government-sponsored plans in several states.
Under a deferred prosecution agreement, the U.S. Attorney’s Office for the Middle District of Florida in Tampa filed a fraud conspiracy charge against the company, but won’t prosecute the case if WellCare meets all of the deal’s terms. According to U.S. Attorney A. Brian Albritton, had his office gone after a conviction, it likely would have put the insurer out of business. That would have hurt customers, innocent employees and shareholders. The settlement comes 18 months after more than 200 federal and state investigators raided the company’s headquarters, causing a sharp fall in its share price and resulting in multiple investigations into its Medicaid business.
Under the terms of the settlement, WellCare must forfeit $40 million and pay another $40 million in restitution to Florida’s Medicaid and “Healthy Kids” plans. WellCare also has agreed “to accept and acknowledge full responsibility for the conduct that led to the government’s investigations,” according to the deferred prosecution agreement. In addition, the company also must retain an independent monitor to review its business operations, cooperate with the government’s ongoing investigations and implement new procedures within 60 days to prevent future abuse or faulty reports to state health care programs.
The company has now established a regulatory-compliance committee and implemented other needed controls. Last July, when the company announced it would restate more than three years of results, it attributed the bad accounting to the “inappropriate tone” set by former executives. Hopefully, this company has learned its lesson and will now operate within the law.
Source: Wall Street Journal
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