WellCare whistleblower suit claims financial improprieties [Tampa Tribune, Fla.]

June 29--TAMPA -- Of all the ugly allegations against WellCare Health Plans, the ugliest may be this: scheming to remove neonatal babies and the terminally ill from its membership rolls.

On Monday, the U.S. District Court in Tampa unsealed a whistleblower lawsuit brought by former WellCare senior financial analyst Sean Hellein. He filed the suit in 2006 on behalf of himself and the U.S. government, and he is represented by the Tampa law firm of Cohen, Foster and Romine.

Hellein says he cooperated in a government investigation of Tampa-based WellCare and provided evidence of widespread deception within the company, largely designed to profit illegally from the Medicaid insurance system for low-income people.

All told, Hellein's suit claims WellCare may have defrauded the federal government, Florida and six other states out of $400 million to $600 million.

Among WellCare's alleged improprieties detailed in the suit are:

--"Cherry-picking" customers. Hellein claims WellCare executives asked him to research how much the company could save by improperly removing certain high-cost Medicaid beneficiaries from its membership rolls.

The company determined that it could save $20,000 per neonatal baby that was removed and $11,500 for every terminally ill patient that was removed, the lawsuit charges. At one point, the company threw a celebratory dinner for the "neonatal babies disenrollment team" after the team successfully removed 425 babies from its membership rolls, the lawsuit claims.

--Self-dealing. Ordinarily, WellCare took out "reinsurance" policies with third parties, which would reimburse WellCare if healthcare costs were much higher than expected.

However, at one point WellCare created its own reinsurance subsidiary in the Cayman Islands that began doing business with the parent company. WellCare began making premium payments to its subsidiary that were nearly five times the amount paid to unrelated reinsurance companies.

The system allowed WellCare to underreport its profit margin to regulators in certain states, the lawsuit alleges.

In 2006, then-Chief Executive Officer Todd Farha said he hoped "New York will not realize we are sending reinsurance dollars to our own subsidiary," the suit claims.

According to its Medicaid contract with Florida, WellCare was supposed to refund certain money to the state if its expenditures on behavioral healthcare didn't reach a certain level.

Instead of making the refunds, though, WellCare shifted money around improperly to keep from having to make the repayments, the lawsuit alleges.

Hellein's suit against WellCare is partly self-serving. As a whistleblower, he would stand to receive some of the court damages from his lawsuit, while the lion's share would likely go to the U.S. and state governments. While actual damages could come to at least $400 million, total damages could exceed $1 billion, because the law allows for up to triple damages in such cases, attorney Barry Cohen said.

Last week, WellCare announced it had reached a preliminary settlement with the U.S. Department of Justice to settle the claims against it for $137.5 million. Hellein is trying to block the settlement from going through, because it is too small of a penalty given WellCare's actions, Cohen said.

For its part, WellCare is trying to put the government investigation behind it.

"We are pleased to reach this preliminary settlement," the company said in a prepared statement. "This is an important step in addressing the government investigations that came to light in late 2007 and in continuing to improve our service to our members, providers and government clients.

"WellCare will continue to emphasize integrity, ethical business practices, regulatory compliance and transparency in our service to our members, and in our relationships with federal and state agencies, government clients and investors."

Reporter Michael Sasso can be reached at (813) 259-7865.

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