Over five years after law enforcement agents raided the Tampa, Florida headquarters of WellCare Health Plans, a federal jury delivered a mixed verdict in the criminal trial of the company’s former top executives. The verdict, which was delivered on Monday, came after a nearly two and a half month trial and lengthy jury deliberations that were interrupted for a 10-day vacation break.
The jury found WellCare’s former CEO and CFO, as well as the vice president of a wholly-owned subsidiary, each guilty of two counts of health care fraud. The CFO was also convicted of two counts of making false statements relating to health care matters, and the company’s former vice president of medical economics was found guilty of making false statements to a law enforcement officer. At sentencing, the defendants face a maximum of 10 years in prison on each of the health care fraud counts and a maximum of five years on the false statement charges. WellCare’s former general counsel was also implicated in the government’s investigation, but his case was severed from the trial of the executives and will be conducted at a later date.
Despite obtaining the executives’ convictions, the jury verdicts were not a complete victory for the government. With respect to several other counts alleged against the executives, the Tampa jury returned verdicts of not guilty and were unable to reach verdicts on others. United States District Court Judge James S. Moody, Jr. declared a mistrial on the deadlocked counts, which the government may bring for retrial at a later date. When it comes time for the sentencings of the convicted executives, however, the fact that they escaped convictions on some of the government’s charges may prove to be a hollow victory because under the United States Sentencing Guidelines, acquitted conduct may still be considered by the judge in determining the sentences notwithstanding the jury’s verdict. Under current law, imposition of the sentence called for in the sentencing guidelines is no longer mandatory, but the applicable sentencing guidelines continue to be the most significant consideration of federal judges in determining sentences.
WellCare itself has been under new leadership for several years. In 2009, the company entered into a deferred prosecution agreement that required it to pay $40 million in restitution and forfeit another $40 million to the United States. As part of the agreement, the company also agreed to cooperate with the government’s investigation of its former executives. Later, in 2010, WellCare also entered into a civil settlement with the Department of Justice in which it paid $137 million. The facts behind the WellCare case were brought to the Department of Justice by a whistleblower who received nearly $21 million as part of the civil settlement paid by WellCare.
The government’s theory of the case was that WellCare and its former executives falsely and fraudulently submitted inflated expenditure information in order to reduce the amount of money that the company was contractually obligated to pay back to the Florida agency that oversees Medicaid in the state. Under Florida law, Medicaid HMOs are required to expend 80% of the Medicaid premium paid for certain behavioral health services and return any difference if the HMO expended less than 80% of the premium. A former WellCare analyst who admitted to participating in the alleged scheme provided extensive testimony for the government at trial, which at times was very complicated.
The defense presented evidence that the expenses challenged by the government were legitimate and that the state Medicaid agency, despite knowing of WellCare’s practices, failed to provide appropriate guidance necessary to navigate through complicated Medicaid program rules. These issues, as well as the judge’s decision to allow the jurors to take a 10-day break during deliberations, are likely to be the subject of extensive appeals by the former executives.