Tampa, Florida – Acting United States Attorney W. Stephen Muldrow announces that WellCare’s former General Counsel, Thaddeus M.S. Bereday (52, Tampa) has pleaded guilty to one count of making a false statement to the Florida Medicaid program. He faces a maximum penalty of five years in federal prison. A sentencing date has not yet been set.
On March 2, 2011, Bereday and four other individuals, Todd S. Farha, Paul L. Behrens, William L. Kale, and Peter E. Clay, were indicted on various federal criminal violations relating to a scheme to defraud the Florida Medicaid program (from the summer of 2003 through the fall of 2007) by making false and fraudulent statements relating to expenditure information for behavioral health care services.
WellCare operates Health Maintenance Organizations (“HMOs”) in several states targeted to government-sponsored health care benefit programs like Medicaid. Two WellCare HMOs operating in Florida, StayWell and Healthease, contracted with the Agency for Health Care Administration (“AHCA”), the agency that administers the Medicaid program in Florida, to provide recipients with an array of services, including behavioral health services.
In 2002, Florida enacted a profit-capping statute that required Florida Medicaid HMOs to expend 80% of the Medicaid premium paid for certain behavioral health services on the provision of those services. If the HMO expended less than 80% of the premium, the difference was required to be returned to AHCA. The indictment alleged the ways in which the defendants falsely and fraudulently schemed to submit inflated expenditure information in the company’s annual reports to AHCA in order to reduce the WellCare HMOs’ contractual payback obligations for behavioral health care services.
On May 5, 2009, the United States filed related charges in an Information and Deferred Prosecution Agreement (“DPA”) against WellCare. Pursuant to that DPA, WellCare was required to pay $40 million in restitution, forfeit another $40 million to the United States, and cooperate with the government’s criminal investigation. The company complied with all of the requirements of the DPA. As a result, the government filed a motion requesting that the Court dismiss the Information against WellCare, which the Court granted.
After a 13-week trial in 2013, a jury returned verdicts against four individuals. Todd S. Farha of Tampa (former WellCare CEO) was found guilty of two counts of health care fraud; Paul L. Behrens of Odessa (former WellCare CFO) was found guilty of two counts of making false statements relating to health care matters and two counts of health care fraud; William L. Kale of Oldsmar (former WellCare VP) was found guilty of two counts of health care fraud; and Peter E. Clay of Wellesley, Massachusetts (former WellCare VP) was found guilty of two counts of making false statements to a law enforcement officer.
Bereday did not participate in the 2013 trial due to health-related issues. His case was scheduled to be tried in September of this year. As part of his plea, Bereday admitted that he, along with others, knowingly and willfully had caused the submission of Healthease’s false 2006 expenditure report to the Florida Medicaid program.
This case was investigated by the U.S. Department of Health and Human Services – Office of Inspector General, the Federal Bureau of Investigation, and the Florida Attorney General’s Medicaid Fraud Control Unit. It was prosecuted by Assistant United States Attorneys Jay Trezevant and Cherie Krigsman, along with Department of Justice Senior Litigation Counsel John A. Michelich and Special Assistant United States Attorney John Bowers.