[Tampa, FL] Managed health care services provider WellCare is again in the news for “allegedly” filing false Medicaid claims, lining their accounts with taxpayer funds, market abuses, and other unlawful practices.

Yesterday, United States Attorney Robert E. O’Neill announced that settlements had been reached with Tampa-based WellCare Health Plans, Inc. over four lawsuits that alleged violations of the federal False Claims Act by whistleblowers.

Note that it says alleged. The latest deal keeps WellCare from admitting guilt in any way, shape or form as a result of these lawsuit settlements.

“This settlement should serve as notice to those defrauding state and federal healthcare programs that, in addition to appropriate criminal prosecutions, we will utilize civil suits to root out their conduct and recover their ill-gotten gains,” said O’Neill.

Those lawsuits alleged – there it is again – that WellCare “engaged in a number of schemes to submit false claims to Medicare and various Medicaid programs.” The government says that WellCare …

1. falsely inflated the amount it claimed to be spending on medical care in order to avoid returning money to Medicaid and other programs in various states including Florida Medicaid and Florida Healthy Kids (Florida’s CHIP program)
2. knowingly retained overpayments it had received from Florida Medicaid for infant care
3. falsified data that misrepresented the medical conditions of patients and the treatments they received
4. engaged in certain marketing abuses, including the “cherrypicking” of healthy patients in order to avoid future costs
5. manipulated “grades of service” or other performance metrics regarding its call center
6. operated a sham Special Investigations Unit

WellCare settled a class-action suit back in 2010

For all of that “alleged” corporate malfeasance, WellCare has agreed to pony up a total of $137.5 million to the United States government and nine states (Connecticut, Florida, Georgia, Hawaii, Illinois, Indiana, Missouri, New York, and Ohio).

This is actually a bad deal for taxpayers because it is estimated that WellCare’s alleged fraudulent billing topped $500 million, according to a former employee.

Instead of a lump sum, WellCare will pay off the $137.5 million in installments – plus interest – over a three year period. And guess what? The four whistleblowers will get a huge chunk of that. Former WellCare employee Sean Hellein will get more than $20 million, while the other three will split $4 million and change.

“The monies recovered in restitution and from this settlement agreement will go to the federal and state programs which suffered these losses, while the forfeited funds will go to law enforcement to help fund future investigations,” said O’Neill.

“In an era of decreasing federal and state budgets, and increasing healthcare costs, we must pursue all available civil remedies to recover losses suffered by government healthcare programs,” he said.

Additionally, if WellCare is sold or controlling interest in the company changes hands before they finish paying off the settlement, another $35 million penalty payment will have to be made by the company with some of that going to the whistleblowers as well.

The release also points out that this isn’t WellCare’s first slap on the wrist by the government. On May 5, 2009, WellCare paid out $80 million to head off potential criminal charges for “allegedly” ripping off the Florida Medicaid and Healthy Kids programs.

But the problems at WellCare went much deeper than that. They were systemic, actually.

Five former executives – including the CEO, CFO and general counsel – were indicted in March 2011 for their crooked ways. All are expected to be tried in court early next year. And former analyst Gregory West pleaded guilty to a conspiracy charge and is currently awaiting sentencing.

Apparently, the feds feel like WellCare can’t be trusted (and who can blame them). The troubled health-care firm is on the equivalent of corporate probation for five years, under the watchful eye of the Inspector General‘s office.

By: Mark Christopher/Sunshine Slate

WellCare

[Tampa, FL] An ex-con has plead guilty to mail fraud and money laundering for his role in operating a massive Ponzi scheme from January 2007 until July 2010.

It was announced by United States Attorney Robert E. O’Neill that 61-year-old James Davis Risher (or “Jay Risher”) of  Sanibel has admitted to representing himself as an experienced money manager and investor when, in fact, he was an ex-felon with prior convictions for fed-level felony fraud offenses and money laundering.

Risher is facing a maximum of 50 years in federal prison for perpetrating the fraud.

In developing his Preservation of Principal Fund, Risher enlisted Lakeland-based insurance agent Daniel Joseph Sebastian to help him promote the fund and sell his client base on the idea. Sebastian created marketing materials that falsely claimed Risher as a successful investor and never mentioned his time in prison.

The promotional materials stated that the that investors’ funds would be safely held in an account titled “The Preservation of Principal Fund.” That account was to be held at Penson Financial Services, Inc., located in Dallas.

There was no “The Preservation of Principal Fund” at Penson. However, Risher did have several accounts titled in his name or his spouse’s name at Penson. But instead of investing the funds as promised, he spent $12.4 million of the investors’ money on a lavish lifestyle, surrounding himself with jewelry, art, motor vehicles and property.

He also compensated the insurance agent $4.1 million for is help in pulling off the scam. He spent $3.8 million of the later investors’ money making payments to the early investors, hence the Ponzi designation.

All told, authorities say 106 victims ponied up $21 million for the chance at high returns (14% to 124%) from Risher’s “fund.” Many of his victims were teachers or retirees.

According to court documents, Risher had plans to fly to Bermuda on May 31, 2011. He was arrested on Sanibel Island before he made it out of the country.

“Risher, who masqueraded as a highly successful equity trader, teamed up with Sebastian to tout sophisticated trading strategies they claimed would generate substantial profits for investors. Instead, Risher and Sebastian used investors’ life savings and retirement nest eggs to line their own pockets,” said Eric Bustillo, Director of the Securities and Exchange Commission’s Miami Regional Office.

By: Mark Christopher/Sunshine Slate

[Bradenton, FL] August ended badly for Florida-based gangs as a seemingly statewide crackdown netted some heavy hitters in the criminal underworld.

Last week, Attorney General Pam Bondi was talking up the efforts of the Office of Statewide Prosecution successful prosecution of Raul Mondragon, also known as “Sleep” on the streets of Manatee County. Sleep and his gang – the Brown Pride Locos – have been a menace to the citizens of Manatee for years.

Mondragon was found guilty of racketeering and conspiracy to commit racketeering, both first-degree felonies. The gang-banger, set to be sentenced this month, faces up to 60 years in lockup for his criminal actions.

“This gang terrorized neighborhoods with shootings, robberies, assaults, and drug dealing, and this verdict makes Manatee County safer,” said Bondi.

Three of Mondragon’s fellow gang members were supposed to stand trial also, but they reached plea deals with prosecutors. Jessie Scott Fuentes (“BOLA”), Juan Carlos Hernandez (“Lazy”) and Moises Antunes (“Cartoon”) also admitted guilt to racketeering and conspiracy to commit racketeering.

Bringing these four to justice  involved a virtual army of state and local officials, including the Attorney General, Office of Statewide Prosecution, Manatee County Sheriff’s Office, Bradenton Police Department and the State Attorney’s Office for the 12th Judicial Circuit.

The FBI participated in “Operation Woodchop”

Even more successful – if you go by the shear number of gang members locked up – was the federally charged “Operation Woodchop.” The target: two neighborhood street gangs that terrorized residents of Orange and Lake Counties.

On Aug. 23, United States Attorney Robert E. O’Neill was pleased to announce that 21 individuals had been charged with federal drug violations for selling and/or distributing crack cocaine, which brings with it a minimum sentence of ten years. One of those arrested, Nathaniel Walker, was also  charged with solicitation to engage in sex with a minor.

Meanwhile, 28 others were hit with state raps, including murder, property crimes and drug violations. All of the men arrested as part of “Operation Woodchop” were members of the “Zellwood Boyz” and the “Tangerine/Terrell Boys.”

As their names would suggest, they operated separately out of Zellwood and Tangerine, but would often work together to traffic in drugs or commit other crimes within a relatively small area.

The massive investigation and capture was led by agents with the Drug Enforcement Administration Orlando District Office Enforcement Group and involved a host of agencies including the Federal Bureau of Investigation (FBI); the Bureau of Alcohol, Tobacco, Firearms and Explosives; the U.S. Marshals Service; the Orange County Sheriff’s Office Gang Unit; the Mount Dora Police Department, the Tavares Police Department and the Central Florida Intelligence Exchange.

Overall, it took 200 federal, state and local law enforcement officers to take down these gangs who held sway over parts of Northern Orange and Lake County.

By: Mark Christopher/Sunshine Slate