WellCare's former chiefs to be charged

Federal prosecutors expect to file criminal fraud and conspiracy charges against former executives of WellCare Health Plans, according to federal officials.

Those could include the top executives who worked at Tampa-based WellCare, one of the nation's largest administrators of Medicare and Medicaid services.

"We expect to file those charges before the year is out," said A. Brian Albritton, U.S. Attorney for the Middle District of Florida. "This is not over."

The charges are linked to a broad agreement announced Tuesday between federal authorities and the new management of WellCare. The company will pay $80 million in fines and restitution related to a scheme that prosecutors say executives used to funnel millions of dollars from WellCare's Florida Medicaid and Healthy Kids programs from 2002 to 2007.

"This was one of the largest health care fraud cases in the United States," Albritton said.

According to federal officials, WellCare was supposed to keep a small portion of Florida Medicaid payments in exchange for administering health care services to plan participants.

Any money left over should have been returned to Florida.

Instead, officials say, WellCare managers created a special subsidiary called Harmony where WellCare reported millions of dollars in fraudulent health care fees, thus returning no money to Florida.

Over time, that practice added tens of millions of dollars in profits to WellCare's bottom line, authorities said. In October 2007, more than 200 federal agents raided WellCare's Tampa headquarters, taking scores of documents.

Several months later, three of WellCare's top executives left the company: Todd Farha, chief executive, president and chairman; Paul Behrens, chief financial officer; and Thaddeus Bereday, general counsel.

Since then, the company has had other problems with regulators over billing and customer service issues.

For now, federal authorities are holding off pursuing charges against WellCare, as long as the company pays $80 million in forfeitures and restitution and complies with a long list of requirements to change its business practices. That includes monitoring by a federally named auditor.

If the company breaks any of those agreements over the next three years, prosecutors can pursue the charges and bring to court a list of criminal acts that WellCare officials have admitted the company committed.

Prosecuting the company immediately would have caused too much "collateral damages," Albritton said, harming current beneficiaries of WellCare, as well as employees and stockholders who knew nothing of the scheme.

"We are pleased to have reached this resolution," said Heath Schiesser, president and chief executive officer of WellCare. "Over the past year, the Company has developed a comprehensive compliance program that will provide a solid foundation for WellCare's future."

Investors also seemed pleased with the deal, sending WellCare's stock up 18.25 percent to close at $18.47 a share Tuesday.

"This has been a very emotion-ridden stock," said Niraj Gupta, director of investments at Harbert Management in New York. "Investors are going to be glad that's all behind us now."