Healthcare Fraud: The Ultimate Chutzpah

In his book, The Joys of Yiddish, the Jewish humorist Leo Rosten defines chutzpah as "gall, brazen nerve, effrontery, incredible 'guts,' presumption plus arrogance such as no other word and no other language can do justice to." In the same book, Rosten also defined the term as "that quality enshrined in a man who, having killed his mother and father, throws himself on the mercy of the court because he is an orphan." Chutzpah is not only restricted to individual misbehavior but includes corporate malfeasance, too. A great example of such behavior is being displayed by Wellcare, a Tampa-based health insurer with a checkered past, which is preparing to bid on billions of dollars in state government contracts to serve Florida's poor and disabled. But why does Chutzpah apply to this company? Well, lets review their checkered past. WellCare administers Medicaid benefits in Florida, Georgia, Hawaii, Illinois, Missouri, New York and Ohio and Medicare Advantage plans in 12 states. The company learned it was under federal investigation in 2008. Law enforcement agencies alleged that the company defrauded Florida's Health Kids program out of $40 million and subsequently made misleading earnings statements based on the ill-gotten gains. The company entered into a deferred prosecution agreement with the U.S. Attorney General's Office and the Florida Attorney General's Office in May 2009, agreeing to pay back $40 million in addition to a $40 million fine. It settled a class-action lawsuit with shareholders for $200 million in December 2010. On April 26, the Tampa, Fla.-based company signed a final settlement with the Civil Division of the U.S. Dept. of Justice, the Office of Inspector General of the U.S. Dept. of Health and Human Services, nine states and five whistle-blowers. The settlement terms were announced as a preliminary agreement in June 2010 and require the company to pay the Justice Dept. a $137.5 million fine. On the same date, WellCare signed a corporate integrity agreement with the HHS Office of the Inspector General. As part of the agreement, the company will hire a third-party observer to monitor its compliance with state and federal regulations, train its employees on compliance with those rules, retain a chief compliance officer and introduce an internal monitoring program. No further fine was required as part of the agreement. As part of various settlements with state and federal law enforcement, WellCare agreed it would neither admit nor deny the allegations against it. Critics also slam the federal settlement, finalized in April, which requires the company to repay less than half of the alleged $400 million to $600 million it siphoned from taxpayers.Five former executives — including CEO Todd Farha, CFO Paul Behrens and general counsel Thaddeus Bereday — were indicted in March 2011 and are awaiting trial. Evidence against them includes taped conversations between executives discussing how they could duplicate their bills to the state. The executives also discussed plans to save money by terminating coverage for neonatal babies and terminally ill patients, and throwing parties to reward employees who ousted expensive enrollees, according to whistle-blower documents. And what does Wellcare representatives have to say? "Most importantly, the corporate integrity agreement ends concern about our eligibility to participate in Medicare, Medicaid and other federal and state health care programs," WellCare General Counsel Tim Susanin triumphantly declared during the company's first-quarter earnings call May 6. That's chutzpah because it is apparent that two different standards of law seem to apply: one for companies and one for ALL others who dare to defraud the federal health program(s). For us mortals the Office of the Inspector General (OIG) of the U.S. Department of Health and Human Services (HHS), takes a tough position regarding suspension or exclusion from the Medicare Program or revocation of Medicare provider numbers. There are some situations in which the law requires that the OIG to issue a mandatory exclusion from the Medicare Program, such as loss of the professional's license or conviction of health care fraud. There are other situations in which exclusion from the Medicare Program will only result in a possible "permissive exclusion," such as conviction of a nonhealth care related felony or discipline of a health professional's license. This gives leeway to the OIG to determine whether or not it will ultimately exclude or suspend the provider from the Medicare Program. Regardless, the consequences are long-lasting and much more devastating to a health provider than might be imagined until it is experienced. A person, organization or facility excluded from the Medicare Program will be placed on the List of Excluded Individuals and Entities (LIEE) maintained by HHS. All Medicare or Medicaid providers or contractors are required by law to check this before contracting with a health provider or employing a health provider. The law prohibits any Medicare, Medicaid or Federal Health Program from contracting with or employing in any way a person or organization that has been excluded. This even extends to any officer, director or shareholder of an organization that has been excluded. Lesser known is the fact that if a person or organization is excluded or suspended from the Medicare Program, then they are automatically placed on the Excluded Parties List System (EPLS) maintained by the government Services Administration (GSA) and they are also "debarred" or excluded form being able to contract with the federal government (or any contractor of the federal government) for anything. This even extends to any officer, director or shareholder of an organization that has been excluded or debarred.States have been required to become more aggressive in recovering fraudulent payments and overpayments in Medicaid cases, as well. A portion of the money they recover must be returned to the federal government since the federal government provides 55% of Medicaid funding. Many states have passed laws that require exclusion from the state's Medicaid Program if the health provider has been found to have committed Medicaid fraud. Exclusion form a state's Medicaid Program is also grounds for exclusion from the federal Medicare Program. Many state's have also passed laws that require revocation of the professional license of an individual who has been excluded from the state's Medicaid Program. For example, in 2009, the Florida Legislature passed SB 1986 which became effective July 1, 2009. It amended Chapter 456 of Florida Statutes. It prohibits the Florida Department of Health from issuing a license to or renewing a license of anyone excluded from the state's Medicaid Program until that person has been reinstated back into the Medicaid Program and has been delivering services in it for at least five (5) years. This would be difficult for any health provider to do. But all of the above mentioned facts do not apply for Wellcare because it has found a guaranteed absolution of all past sins: hire a former U.S. senator , who serves as a paid director on the company's board and chairs a committee to ensure the company is ethical and complies with regulations, and contribute lots of money to state political campaigns ( at least $2 million since 1997) What can we do faced with such ultimate Chutzpah? Don't give up fighting the corrupt political system. Start investigations, blow the whistle, file lawsuits and support a free and unbiased media. Otherwise, if left unchallenged, this system will metastasize and destroy us. Yours Bernd