WellCare fights Iowa judge's ruling on nixed contract
Lawsuit was filed last week in Polk County District Court after judge recommends terminating the contract, court documents show
WellCare, a publicly traded insurer based in Florida, has filed a lawsuit against the Department of Human Services in Iowa, contesting its nixed contract to help oversee the state's Medicaid program.
The lawsuit was filed last week in Polk County District Court. The state had awarded a Medicaid contract to WellCare earlier this year, but on Dec. 18, an administrative judge recommended terminating the contract due to how the company allegedly disclosed information on former executives' fraud convictions. In 2010, a jury found former WellCare CEO Todd S. Farha, former CFO Paul L. Behrens and former vice president William Kale guilty of two counts of health care fraud for submitting false expenditure reports to the state Medicaid program. The jury also found Behrens guilty of two other charges of making false statements related to health care matters. A fourth defendant, former vice president Peter E. Clay, was found guilty of making false statements to federal agents.
The judge also cited "improper communication" with state officials, according to court documents provided by DHS. The documents state that representatives of WellCare, led by former state legislator and DHS contractor Renee Schulte, communicated with state officials during a "blackout period" in the bidding process, thereby tainting and unduly influencing the awarding of those bids. The judge's recommendation was affirmed by Janet Phipps, director of Iowa's Department of Administrative Services.
WellCare filed an appeal on Dec. 22.
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In an email, WellCare spokesperson Crystal Warwell Walker said, "This decision does not accurately reflect the facts, the integrity of Iowa's procurement process or Iowa law. We intend to use every avenue available within the legal system to correct this erroneous outcome."
WellCare of Iowa State President Lauralie Rubel added in a statement, "We will immediately seek an injunction that maintains the status quo to allow WellCare of Iowa to continue its participation in the program while this matter is appealed in a court of law."
Managed care, a system of health care in which patients agree to visit only certain doctors and hospitals, and in which the cost of treatment is monitored by a managing company, has been newly implemented in Iowa. The new contracts are set to begin on March 1, 2016.
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