LOUISVILLE, Ky. -- A former sales manager for Humana pleaded guilty Wednesday to taking more than $2 million in bribes from a South Carolina company to steer insurance brokers their way.
James Albert Wegner Jr., 48, of New Port Richie, Fla., admitted to a role in a scheme to cut out other insurance brokers and steer Medicare Advantage and Medicare Prescription Drug plans to Cutler & Associates of Columbia, S.C., in exchange for cash. A second former sales manager for Humana, Glenn Fine, has also been charged.
Fine has no listed attorney in court records. He is scheduled for arraignment Feb. 19 in federal court in Louisville.
Two other men, Cutler & Associates President Shep Cutler, 73, and a business associate, Dan McNerney, were named as participants in the plan in Wegner's plea agreement. Neither has been charged.
A message left for Shep Cutler was not immediately returned Wednesday. Attempts to reach McNerney through his Missouri-based business, Columbia Management Associates, were not successful.
Prosecutors say Wegner and Fine were supposed to refer insurance brokers and agents, known as Group Producing Agents or GPAs, to Managing General Agencies, known as MGAs. The MGAs would contract with Humana to service the GPAs in selling Medicare Advantage and Medicare Prescription Drug plans to Medicare enrollees.
Cutler & Associates was one of the largest MGAs to contract with Humana. Prosecutors said that between February 2006 and at least June 2010, Cutler & Associates issued checks totaling more than $2 million to an account held by Coastal Consulting in Louisville, Ky. The business shared an address with Fine's home.
During the same time frame, prosecutors said, Cutler & Associates issued the same amount in checks to a business called Suncoast Marketing in New Port Richey. Suncoast Marketing's address shared an address with Wegner's home.
Prosecutors noted that the only funds deposited in the accounts for Suncoast Marketing and Coastal Consulting were from Cutler & Associates. Money was transferred out of each account to other accounts owned by Fine and Wegner, prosecutors said.
Assistant U.S. Attorney Lettricea Jefferson-Webb told the court that Wegner, Fine, Cutler and McNerney met at a hotel in Florida in 2005, and agreed to split fees associated with the referrals evenly four ways and to set up accounts in the names of Wegner's and Fine's wives. The spouses were not charged as of Wednesday.
"Did you do what she said you did?" U.S. District Judge Charles Simpson asked Wegner.
"Yes, I did, your honor," Wegner replied.
Jefferson-Webb said Humana, which cooperated with the investigation, lost money as part of the scheme.
"Humana also suffered a loss to their business as a result of legal and investigative costs," Jefferson-Webb said.
Simpson did not immediately set a sentencing date for Wegner. As part of the plea deal, Wegner will pay $100,000 in restitution and forfeit another $900,000. He's been ordered to pay $300,000 before sentencing and the remaining $600,000 in monthly payments
Wegner's attorney, Robert Eckard, did not object to his client being freed on a $25,000 unsecured bond.
"This has been going on for three years," Eckard said. "He's not going anywhere."
Humana spokesman Tom Noland said the company cooperated with the FBI, U.S. Attorney's Office and U.S. Health and Human Services Inspector General during the investigation. Noland described Humana as a victim of Fine and Wegner's scheme.
"They abused their positions at Humana to profit personally at the expense of the company," Noland said.
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