A story of redemption and the value of self-reporting

Those who read about the 11 south Florida residents charged with defrauding Medicare for more than $25 million were probably just as horrified as the FBI to learn about the details of a case that used more than 1,200 expatriates to fraudulently collect Medicare reimbursement.

Eleven defendants were charged with multiple counts of Medicare fraud by recruiting residents from Nicaragua and the Dominican Republic to enroll in Medicare Advantage HMO plans offered through Florida Healthcare Plus (FHCP), a Coral-Gables-based HMO. In a 36-count indictment, the FBI alleged that the defendants used false Florida addresses for individuals living outside the country and then convinced those individuals to enroll in Medicare Advantage plans through FHCP, assuring them that the plans were available in Nicaragua and the Dominican Republic.

One defendant served as chief operating officer of FHCP until May 8, 2013. Another worked as the marketing director until April 21, according to the indictment. Three others were employed by FHCP as insurance agents.

The whole situation looked bad for everyone involved. One federal agent called the case an example of "in-your-face fraud." Although FHCP was not charged with any wrongdoing, the company didn't escape unscathed, since as much as $10 million in fraudulent Medicare funding filtered through its books. On the day of the arrests, 60 federal agents raided the company's office, and federal prosecutors sought to freeze FHCP's bank assets.

But the last three weeks has cast new light on the managed care company. Last week, we learned FHCP's CEO, Susan Rawlings Molina, brought to the company in January to revitalize the struggling business, self-reported wrongdoing to Medicare regulators in August, according to the Miami Herald.

To her credit, Molina ordered an internal review of the company's finances, and noticed that FHCP was making unusually high payments to two medical groups: Alexis Le Professional Medical Group Inc., which operated in the Dominican Republic, and Rodney Montoya Corp., based in Nicaragua. In reality, expatriates living in the two countries were siphoned through the two medical groups, swindling millions of Medicare dollars as a result.

"In my 27 years of experience, I've never seen anything like it," Molina told the Herald. "The actions [of these former employees] are deplorable."

Now a company that was initially described by Assistant U.S. Attorney Eric Morales as "a dirty company" and "corrupt," is seeking redemption. Within 24 hours of the Nov. 19 raid, Molina and FHCP lawyer Jaime Guttman were able to convince prosecutors to lift the restraining order against the company and stop the civil action that sought to freeze the company's assets, a sure death sentence for FHCP.

The unraveling of this story has recast the image of the company, while also highlighting the benefits of self-reporting suspicious activity. For three years, defendants in the case allegedly used FHCP as a conduit for fraudulent activity. But through self-reporting, Molina and Guttman brought the company back from the brink of extinction.  By performing an internal review--and more importantly, picking up on curious billing activity--Molina was able to self-report just a few months before the indictment was unsealed and avoid potentially catastrophic sanctions from prosecutors.

Of course, FHCP isn't out of the woods yet. In September, the company was suspended by the Florida Office of Insurance Regulation for "failure to maintain adequate statutory surplus and accounting errors," according to a report (.pdf). FHCP is unable to enroll new members until it files an "accurate financial statement."

But Molina assured the South Florida Business Journal that FHCP would be "well-capitalized" by the end of December. Perhaps more importantly, Molina told the Herald, "The company is not the company it once was."

Hopefully that's true. Perhaps this is the first step in recasting a new, more ethical image. - Evan (@HealthPayer)

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