South Broward Hospital District accused of aiding Wellcare fraud

By Dan Christensen, BrowardBulldog.orgmemorialhealthcare

The Justice Department is investigating whistleblower allegations that the South Broward Hospital District conspired with Tampa’s Wellcare Health Plans to bilk Medicaid and Florida’s Healthy Kids program.

The district, the legal name of Hollywood’s Memorial Healthcare System, is specifically accused of helping Wellcare doctor its accounting books so it could avoid paying back excess profits owed to Florida and the federal government.

“We have never been named in the suit (as a defendant), nor have we received any subpoena,” said Memorial spokeswoman Kerting Baldwin. She declined to discuss the matter further.

Wellcare is one of Florida’s largest Medicaid plan operators. The FBI raided its headquarters in October 2007. It was charged last  year with conspiring to steal about $40 million owed to Florida Medicaid and Healthy Kids from 2002 to 2007.

Prosecutors have agreed not to pursue a criminal conviction that could put Wellcare out of business. In exchange, Wellcare signed a deferred prosecution agreement that required it to pay $80 million and to cooperate with law enforcement.

The South Broward Hospital District is not charged with any crime, nor is it a defendant in the whistleblower complaint. But its alleged role in Wellcare’s scheme to enrich itself at taxpayer’s expense is outlined in a 60-page civil False Claims Act complaint pending against Wellcare in Tampa federal court.

The act allows a private person with knowledge of a false or fraudulent claim against the government – in this case former Wellcare financial analyst Sean Hellein – to use the act to sue a defendant on behalf of the United States.

This summer, after a three-year inquiry, the government intervened as a plaintiff on Hellein’s side.

Wellcare is a contractor with Florida Healthy Kids, a not-for-profit corporation authorized by the Legislature, to provide Medicaid coverage to poor children. Its profit is in the difference between the government premiums it receives and the dollars it pays for patient care to doctors, hospitals and other healthcare providers.

South Broward, a tax-subsidized public hospital system, operates Memorial Regional and five other hospitals.

According to the complaint, South Broward and Wellcare negotiated a number of service contracts in late 2005, including contracts for the Healthy Kids program. The maximum administrative cost for a Healthy Kids contract was set at 15 percent. If Wellcare spent less than 85 percent on patient care, it was obliged to return half of any excess profit.

The complaint alleges “Wellcare and South Broward conspired” to allow Wellcare to avoid such refunds. They succeeded, it says, by making it appear as if Wellcare was paying more for patient care than it actually was.todd_s_farha_wellcare_5

South Broward facilitated the scheme “by fraudulently increasing Wellcare’s costs for Healthy Kids Medicaid beneficiaries by 31.6 percent,” the complaint said. Likewise, South Broward allegedly shifted costs from other Wellcare contracts with no repayment obligation to Wellcare’s Healthy Kids account.

The complaint says former Wellcare chief executive Todd Farha “admitted that Wellcare’s contract with South Broward ‘was designed to push us up to the 80 percent give-back point with the state” in a December 7, 2005 email. The recipient of the email is not identified.

The same day, the complaint says, another top Wellcare official told Hellein “that he should not discuss high costs in the Health Kids contracts signed with South Broward because this was a ‘politically sensitive’ topic and ‘part of our business strategy.’”

The complaint offers no reason why South Broward would help Wellcare commit fraud.

Still, it cites the Wellcare-South Broward contracts as “an example of a fraudulent practice that has occurred” in other locations “where Wellcare negotiated with a single provider to sell a number of different products, including Healthy Kids,” the complaint said.

How much South Broward saved Wellcare in repayments is not stated in the complaint. But it says documents show that Wellcare calculated its Healthy Kids payback “exposure” between October 2004 and September 2005 as $3.8 million.

The complaint says Wellcare used a variety of ways to defraud Florida, the federal government and half-a-dozen states where it did business – including “dumping” eligible but costly enrollees and various schemes to inflate and misallocate costs. It estimated total damages from the scheme of $400 to $600 million.

When the complaint was unsealed in late June, Wellcare announced that it had agreed to settle with the government for $137.5 million. But the court must approve any deal, and Hellein’s Tampa attorney, Barry Cohen, said he opposes it as grossly inadequate.

Tampa Executive Assistant U.S. Attorney Karin Hoppmann declined comment.

Whistleblowers, also known as relators, can receive between 15 to 25 percent of the proceeds of a False Claims Act settlement depending on their contribution to the case.

A hearing is expected later this year.

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