Health News

Ex-WellCare general counsel gets six months in U.S. prison

(Reuters) - A former general counsel of insurer WellCare Health Plans Inc was sentenced on Wednesday to six months in prison for making a false statement to Florida’s Medicaid program as part of what prosecutors called a $35 million healthcare fraud scheme.

Thaddeus Bereday, who was indicted in 2011 along with four other former WellCare executives, was sentenced by U.S. District Judge James Moody in Tampa, Florida, after pleading guilty to a false statement charge in June, according to court records.

Bereday, 52, was also sentenced to three years of supervised release during which he must spend one year in home confinement, prosecutors said. He was also ordered to pay a $50,000 fine.

His lawyer, Jack Fernandez, declined to comment.

Bereday’s plea came after the U.S. Supreme Court in April declined to hear former WellCare Chief Executive Todd Farha’s appeal of his 2013 conviction over his role in the scheme to cheat the Medicaid health insurance program for the poor.

Prosecutors said Farha and others engaged in a scheme to file false Medicaid expense reports to Florida’s healthcare administration, overstating the amount the company’s subsidiaries spent on mental health services for Medicaid patients.

Under a 2002 Florida law, companies were required to spend 80 percent of the Medicaid dollars they received for mental health services, and return the difference if they spent less.

According to court papers, Tampa-based WellCare created a new unit to pay mental healthcare providers while retaining millions of dollars in Medicaid financing that should have been refunded.

A federal jury in 2013 convicted Farha, former Chief Financial Officer Paul Behrens and former vice presidents William Kale and Peter Clay.

In 2014, Moody sentenced Farha to three years in prison, Behrens to two years in prison, Kale to one year in prison and Clay to five years of probation.

According to court papers, Bereday has also agreed to pay $4.5 million to settle a related lawsuit by the U.S. Securities and Exchange Commission.

WellCare in 2009 agreed to pay at least $217.5 million to resolve criminal and civil investigations by the U.S. Justice Department. It also agreed to pay $10 million to resolve related claims by the SEC.

WellCare in a statement said it fully cooperated in the investigation and has resolved all issues directly involving the company.

The case is U.S. v. Farha et al, U.S. District Court, Middle District of Florida, No. 11-cr-115.

Reporting by Nate Raymond in Boston; Editing by Tom Brown and Lisa Shumaker