Appeals court upholds fraud convictions of four WellCare executives

A federal appeals court upheld guilty verdicts against four former WellCare executives convicted of hiding money from state regulators in order to keep additional proceeds from the company's Medicaid managed care plans.

In a 125-page decision, a three-judge panel for the 11th Circuit U.S. Court of Appeals found that the evidence “overwhelmingly” supported the four previous convictions against former WellCare CEO and President Todd Farha, former Chief Financial Officer Paul Behrens, former Vice President of Clinical Services William Kale and former Vice President of Medical Economics Peter Clay.

During the trial, prosecutors argued that the four executives created a separate unit to hide Medicaid reimbursement and falsified provider payments in an effort to skirt a Florida law that required insurers to spend at least 80 percent of Medicaid premiums for behavioral health on beneficiary services.

During the appeal, the executives argued that their convictions were based on insufficient evidence. But the judges determined the executives were fully aware of the 80/20 law and even devised a way to pay Florida’s Agency for Health Care Administration $1 million to avoid suspicion. Although Farha said that he was not involved in the preparation of WellCare’s expense reports, the judges countered that as “CEO, president and director of WellCare… he not only devised, but implemented and supervised the scheme's execution year after year.”

In response to Clay’s assertion that he did not make false statements to federal authorities, the appeals court ruled that the prosecution’s evidence showed he was aware of the falsified financial figures. All the former executives except Clay will serve prison time for the charges.

- here’s the court’s opinion