State’s share in WellCare case: $33 million

Print Friendly and PDF By: Andy Miller Published: Apr 9, 2012

Georgia’s portion of a WellCare settlement with the federal government and several states will be $33 million, the state’s attorney general said Monday.

Under a settlement agreement announced last week, WellCare has agreed to pay the U.S. and nine states a total of $137.5 million, plus interest, over three years.

The Tampa-based company runs one of three HMO-like organizations that, as a group, supervise care for more than 1 million Medicaid and PeachCare members in Georgia.

The $33 million will be in federal and state funds, with Georgia’s net amount being $13 million. Medicaid is jointly financed by the states and federal government.

Separately, in another Georgia-related whistleblower case, a radiation oncology practice in Decatur and its affiliates recently agreed to pay $3.8 million to settle claims that they violated the False Claims Act, the U.S. Justice Department said.

A WellCare spokeswoman said Monday that the nine states’ amounts were determined by the amount of Medicaid business that the company had in each state. WellCare had no say in how the money was divided, said the spokeswoman, Denise Malecki.

The settlement resolves allegations of accounting fraud, falsification of records and other reports, and manipulation of the enrollment of covered recipients by selective marketing and related misconduct, according to state Attorney General Sam Olens, who announced the Georgia portion of the settlement Monday.

The alleged accounting fraud included inflating expenses that serve as the basis for setting per-patient rates paid to the company — in one allegation, counting reinsurance profit as an expense, Olens’ office said.

The alleged manipulation of enrollment of members included targeting low-cost and healthy people, while discouraging, failing to enroll, or disenrolling, undesirable recipients, those considered high-cost and chronically ill, the Olens statement said.

The case began with whistleblower information that led the FBI to raid WellCare headquarters in Tampa in 2007.

WellCare recently issued a statement announcing a settlement had been reached.

“We are pleased that these matters are fully resolved,” CEO Alec Cunningham said in the statement. “WellCare is a transformed company that is focused on providing quality, cost-effective health care solutions.”

The states sharing in the settlement are Connecticut, Florida, Georgia, Hawaii, Illinois, Indiana, Missouri, New York and Ohio.

Analysts say the amount of money WellCare will pay out does not end the company’s chances to recover financially, according to a Health News Florida article.

“It’s conceivable that the company could double its revenues in the next couple of years,” said Tom Carroll, an analyst at Stifel Nicolaus who follows WellCare closely.

Several states, including Georgia, are moving their Medicaid recipients into managed-care plans on a large scale –- a business that WellCare specializes in, along with other companies.

“With or without the federal Medicaid expansion, WellCare has a huge revenue opportunity over the next few years,” CITI analyst Carl McDonald wrote in a report on the company, according to Health News Florida.

WellCare had already paid $80 million in 2009 to resolve a criminal investigation that led to a guilty plea by a former analyst and charges against five other executives, including ex-CEO Todd Farha.

In the other False Claims case, Radiotherapy Clinics of Georgia allegedly billed Medicare for medical treatment that they provided to prostate cancer patients in excess of those permitted by Medicare rules and for services that were not medically necessary, the Justice Department said in a statement.

 

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