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Former Wellcare executives found guilty, acquitted of fraud charges


Published:   |   Updated: June 10, 2013 at 03:06 PM

TAMPA - The 10-woman, two-man jury deliberating for weeks in the WellCare medical fraud trial delivered a mixed bag of verdicts at noon Monday, finding all four health care corporation executives guilty of a some of criminal charges against them while acquitting the same defendants of many others.

On the more serious charge of conspiracy to commit medical fraud on each defendant, the jury was unable to reach verdicts and told U.S. District Judge James Moody they were deadlocked on those counts.

"We respect the jury's verdict," said Lee Bentley, with the U.S.Attorney's Office in Tampa, though prosecutors will meet to decide whether to retry the mistried counts.

Defense attorneys for the four executives charged in the sweeping fraud case declined to comment after the verdicts were read into the record. The defendants also declined to comment.

The trial of the four former WellCare executives on federal Medicaid fraud charges lasted two-and-a-half months. Prosecutors listed more than 100 witnesses and presented reams of evidence in the forms of emails and electronic spreadsheets and accounting ledgers.

Charged with multiple counts of medical fraud, conspiracy and making false statements were former WellCare Chief Executive Officer Todd Farha; Chief Financial Officer Paul Behrens; William Kale, vice president of Harmony Behavioral Health, a WellCare subsidiary; and Peter Clay, vice president of medical operations.

Farha was found guilty of two counts of health care fraud, and acquitted of six other charges including giving false statements.

Behrens also was found guilty of two counts of health care fraud and two counts of making false statements, but was acquitted of other two other false statement charges.

Kale was found guilty of two counts of health care fraud and Clay was found guilty of two counts of making false statements.

Prosecutors said the four defrauded the government out of more than $30 million - money that should have been spent on people in need, not to increase the profits of an already profitable company.

WellCare deals exclusively with Medicare and Medicaid claims and the government alleged that the executives produced false documents and formed Harmony Behavioral, described as a "shell company," to inflate the costs for behavioral health-care services.

WellCare and other managed health care corporations that process Medicare and Medicaid claims are allocated a certain amount every year through the state's Agency for Health Care Administration. The companies are allowed to keep 20 percent of that amount for administrative costs and profit.

The remaining 80 percent pays providers for the health care services. The unused money must be returned to the Agency for Health Care Administration.

Prosecutors said that the WellCare executives created fake expenses to make the books look as though the company was spending all or nearly all of the 80 percent, when expenditures actually were far less.

The result, prosecutors said, was explosive profits, which caused the stock of the publicly traded company to soar.

Defense attorneys disputed the allegations, saying no crimes were committed and all the business practices of WellCare under the executive staff were legitimate and within the law.

Farha, who holds a Harvard MBA and started at WellCare in 2002, went by the books in incorporating Harmony Behavioral, defense attorneys said, and he even hired a bevy of outside consultants to make sure everything was legitimate.

The charges stem from a disagreement between the Agency for Health Care Administration and WellCare over how claims were processed, defense attorneys argued.

All the defendants were allowed to remain free, pending a sentencing hearing that has not yet been set.

kmorelli@tampatrib.com

(813) 259-7760

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