Saturday, May 14, 2011

Hawaii's role in federal fraud settlement reveals possible double-dealing behind SB 1274

On April 26, 2011, Hawaii was one of nine states signing a settlement agreement between Wellcare Health Plans and the Office of Inspector General of DHHS, Civil Divisions of the US Attorney's office, and every state where Wellcare currently does business.

According to the company's first quarter SEC filing, Wellcare gets their federal slate wiped clean in exchange for the $137 million settlement.

The United States and the Settling States agree to release us from any civil or administrative monetary claim under the False Claims Act and certain other legal theories for certain conduct that was at issue in their inquiries and the qui tam complaints. Likewise, in consideration of the obligations in the Federal Settlement Agreement and the Corporate Integrity Agreement (as described below under United States Department of Health and Human Services), OIG-HHS agrees to release and refrain from instituting, directing or maintaining any administrative action seeking to exclude us from Medicare, Medicaid and other federal health care programs.

When did anyone plan on telling the people in Hawaii that their Medicaid health insurer, the same one that benefits from segregating everyone on Medicaid into a guinea pig herd with no access to outside second opinions, is paying the state millions in exchange for not being convicted of criminal Medicaid fraud?

In practical terms, this means that Hawaii Governor Abercrombie has been negotiating silently for the past several months for Hawaii's share of a settlement deriving from accusations of criminal Medicaid fraud. SB 1274 came out of his office unexpectedly in January. At one time, Wellcare lawyers admitted to state legislators they had personally drafted a silent companion bill.

How much of a fraud settlement is Hawaii getting? An article out of Florida expects that state to receive $23 million.

While Wellcare reported their percentage rate increases in Florida and Georgia, they did not disclose the figure for Hawaii and New York premium increases.

The nine states that settled with Wellcare over criminal Medicaid fraud allegations are Connecticut, Florida, Georgia, Hawaii, Illinois, Indiana, Missouri, New York and Ohio. Wellcare currently operates Medicaid programs in all but two of those states, Connecticut and Indiana.

Also announced in the quarterly report,

On May 4, 2011, the Federal Court entered an order (the “Approval Order”) approving the Stipulation Agreement. As required by the Stipulation Agreement, in March 2011 the Company paid $52,500 into an escrow account for the benefit of the class. The Stipulation Agreement also provides, among other things, that the Company will make an additional cash payment to the class of $35,000 by July 31, 2011 (the “July 2011 Payment”). It also requires, among other things, that the Company issue to the class tradable unsecured subordinated notes having an aggregate face value of $112,500, with a fixed coupon of 6% and a maturity date of December 31, 2016. Additionally, the Company will be required to pay to the class an additional $25,000 if the Company experiences a change in control at a share price of $30 or more within three years of the date of the Stipulation Agreement.

Meanwhile, Wellcare's premium income in the first quarter (almost $1.5 billion, all of it federal/state Medicaid or Medicare funding) was up nine percent over the first quarter of 2010.

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I'm the mom of a child with disabilities. Hannah's first neurologist said she might never develop beyond the level of a 2 month old infant, and there wasn't anything I could do about it. The brain damage was just too severe. Nine years later, she walks, uses a touchscreen computer and I've just been shown she can learn to construct sentences and do simple math with the right piece of technology. Along the way, I discovered I needed to teach myself what Hannah's rights to services really were. Learning about early intervention services led to reading about IDEA and then to EPSDT. I've been waiting for the Obama administration to realize the power and potential of EPSDT for the medical rights - including the right to stay at home with their families - of children with disabilities. The health reform people talk about long term care, and the disability people talk about education and employment, but nobody is talking about EPSDT. So I am.