>June 29–TAMPA — Of all the ugly allegations against WellCare Health Plans, the ugliest may be this: scheming to remove neonatal babies and the terminally ill from its membership rolls.

On Monday, the U.S. District Court in Tampa unsealed a whistleblower lawsuit brought by former WellCare senior financial analyst Sean Hellein. He filed the suit in 2006 on behalf of himself and the U.S. government, and he is represented by the Tampa law firm of Cohen, Foster & Romine.

Hellein says he cooperated in a government investigation of Tampa-based WellCare and provided evidence of widespread deception within the company, largely designed to profit illegally from the Medicaid insurance system for low-income people.

All told, Hellein’s suit claims, WellCare may have defrauded the federal government, Florida and six other states out of $400 million to $600 million.

Among WellCare improprieties alleged in the suit are:

– “Cherry-picking” customers. Hellein claims WellCare executives asked him to research how much the company could save by improperly removing certain high-cost Medicaid beneficiaries from its membership rolls.

The company determined that it could save $20,000 for each neonatal baby that was removed and $11,500 for every terminally ill patient that was removed, the lawsuit charges. At one point, the company threw a celebratory dinner for the “neonatal babies disenrollment team” after the team successfully removed 425 babies from its membership rolls, the lawsuit claims.

– Self-dealing. Ordinarily, WellCare took out “reinsurance” policies with third parties that would reimburse WellCare if health care costs were much higher than expected.

At one point, WellCare created its own reinsurance subsidiary in the Cayman Islands that began doing business with the parent company. WellCare began making premium payments to its subsidiary that were nearly five times the amount paid to unrelated reinsurance companies.

The system allowed WellCare to underreport its profit margin to regulators in certain states, the lawsuit alleges.

In 2006, then-Chief Executive Officer Todd Farha said he hoped “New York will not realize we are sending reinsurance dollars to our own subsidiary,” the suit claims.

As a whistleblower, Hellein could receive some of the court damages from his lawsuit. Actual damages could come to at least $400 million, but total damages could exceed $1 billion because the law allows for up to triple damages in such cases, attorney Barry Cohen said.

Last week, WellCare announced it had reached a preliminary deal with the U.S. Department of Justice to settle the claims against it for $137.5 million. Hellein is trying to block the settlement from going through because it is too small of a penalty given WellCare’s actions, Cohen said.

WellCare is trying to put the government investigation behind it.

“We are pleased to reach this preliminary settlement,” it says in a written announcement. “This is an important step in addressing the government investigations that came to light in late 2007 and in continuing to improve our service to our members, providers and government clients.

Reporter Michael Sasso can be reached at (813) 259-7865.

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