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Health News Florida

New Whistleblower Charges at WellCare

Attorney Kevin Darkin
Attorney Kevin Darkin

WellCare Health Plans, which paid more than $400 million to settle past accusations of health-care fraud, is once again being sued under the False Claims Act.

The whistleblowers in this case are a half-dozen former WellCare staff members, including the former Vice President of Care Management Dr. Kirk Cianciolo. All are represented by Tampa attorney Kevin Darken, from the same firm that handled the previous whistleblower case against the Tampa-based WellCare.

Attorney Kevin Darkin
Attorney Kevin Darkin

In their complaint, the six plaintiffs say they were all fired on Dec. 3, 2012, after resisting pressure from the top to deny payment for medically necessary hospital stays. They say what they were ordered to do would have violated Medicare and Medicaid guidelines.

Throughout 2012, the complaint says, WellCare improperly kept money that properly should have gone to hospitals or been repaid to Medicare or state Medicaid programs in Florida, Georgia, Illinois, New York, Ohio, Kentucky and Missouri.

The lawsuit, filed in the U.S. District Court in Tampa in May 2013, had been sealed while the U.S. Attorney’s Office decided whether to join in the case. Last week the case was unsealed after federal prosecutors decided not to intervene.

They did not say why. Sometimes federal attorneys walk away from a case because it is weak, but other times they stay out of it because they are overloaded with other cases or the potential recovery is relatively small.

WellCare spokeswoman Crystal Walker said Monday that the company had not yet been formally served with the lawsuit and could not respond until then.  She said in a written statement: “The company is deeply committed to regulatory compliance and ethical behavior.  Our systems and processes support a culture of integrity, personal accountability and transparency. “

WellCare is Florida’s largest Medicaid HMO contractor, with more than 622,000 state-sponsored members. It holds 22.5 percent of the market, according to Deutsche Bank analyst Scott Fidel. The company also boasts 100,000 Medicare Advantage members in Florida, and is trying to attract more during the current open enrollment, which ends Dec. 7.

The litigants in the new whistleblower case, aside from Dr. Cianciolo, include two people who reported to him: Karen Ross, former vice president of clinical management, and Sandra Brower, senior director of training/compliance.

Other plaintiffs include two former WellCare managers who reported to Ross: Circe Lopez, director of utilization management, and Kristi King, senior manager of analytics.

All of these former staff members had been at WellCare less than two years when the mass firing took place on Dec. 3, 2012. The sixth named plaintiff, Alyson Broxton Scott, a project analyst who reported to Lopez, had been with the company since 2006. 

In a successful False Claims Act case, most of the recovered money goes to the government. Depending on the circumstances, the whistleblower may receive 15 or 20 percent. Multiple plaintiffs would have to divide it.  

The lawsuit concerns the way WellCare handled requests for coverage of a hospital stay.  The complaint says that when WellCare switched its accrediting organization to the (NCQA) beginning in 2010, it had to make decisions on whether a hospital admission was medically necessary within 24 hours of receiving clinical information, rather than the 72 hours it was accustomed to.

WellCare.jpg

Also, according to the lawsuit, under NCQA WellCare had to accept the patient’s diagnosis as sufficient information on which to make the decision; before, it had required more back-up information.

The denial rate for coverage of inpatient care, which ran between 11 and 14 percent in 2011, fell to about 2 percent by November 2012, the complaint says. This caused friction within the company, as medical spending went up. 

The suit says that WellCare Chief Financial Officer Tom Tran and other executives called for a daily report on the denial rate.  Dr. Cianciolo, who conducted a literature search on denial rates, told them at a meeting that 2 percent was the industry standard.

According to the complaint, Tran replied, “I don’t give a damn about national statistics; we are losing too much money …” He said denial rates needed to return to what they had been in the past, the lawsuit says.

Tran is still listed on the WellCare web site as the senior vice president and chief financial officer, but he has been training Andrew Asher to take over his role after the release of third-quarter earnings. The earnings release is set for Wednesday at 8:30 a.m.

Health News Florida’s request to speak with Tran and others mentioned in the lawsuit was denied. Company spokeswoman Walker sent a note saying, “It is our policy that inquiries from the media are handled by WellCare’s Corporate Communications team.”

Tom Tran
Credit WellCare Health Plans
Tom Tran

The publicly traded company is still being monitored for compliance with federal law under the terms of a five-year “Corporate Integrity Agreement” it signed in 2011 with the Office of Inspector General of the Department of Health and Human Services.  It calls forWellCareto train staff on the legal requirements, assign responsibility for compliance in each division, file reports regularly and hire an independent review organization to conduct evaluations.

WellCare has been trying hard to live down a reputation it earned beginning in October 2007, when the FBI and other agencies raided WellCare’s Tampa headquarters, carting off computers and boxes of records. The chief whistleblower in that case, Sean Hellein, had worn a wire for months to get evidence that top executives were using a subsidiary to hide money they owed Florida and U.S. taxpayers, and were falsifying records.

Hellein’s suit described a culture of financial corruption that included moving money between accounts to make it appear patients’ treatment cost more than it actually did, in order to justify higher Medicaid payments from the state. The company even gave bonuses to staff members who found ways to get patients with expensive illnesses to disenroll from the plan, he said.

WellCare settled criminal charges against the company in 2009 by agreeing to pay $80 million, split between the state and federal government. The company later settled a class-action suit by shareholders for $200 million and Hellein’s whistleblower suit for $137.5 million.

The executives who got the company in trouble were not tried until 2013. They were found guilty of some counts, acquitted on others.

In May of this year, Todd Farha, former CEO and president, drew a three-year prison sentence; Chief Financial Officer Paul Behrens, two years; William Kale, vice president of the subsidiary where the money was hidden, one year and one day; and Peter Clay, vice president of medical operations, received probation.

Long-time Tampa litigator Barry Cohen served as lead attorney on the Hellein case. Darken, a former federal prosecutor, is his law partner.

Darken could not be reached for comment.

--Health News Florida is part of WUSF Public Media. Contact Special Correspondent Carol Gentry at cgentry@wusf.org. For more health news, visit HealthNewsFlorida.org.

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