This week, it was announced that the former general counsel of a company that operates health maintenance organizations had been sentenced to prison for his involvement in a $35 million health care fraud scheme. 52-year-old Thaddeus M.S. Bereday of Tampa, Florida was sentenced to six months in prison. Bereday has also been ordered to serve three years of supervised released and to pay a fine of $50,000. The defendant pleaded guilty to making a false statement in connection with health care matters on June 27.
Beredy served in several positions include as general counsel for WellCare Health Plans, which is a publicly traded corporation. The company operates health maintenance organizations (HMOs) in several states. The company targets government-sponsored healthcare benefit programs, including Medicaid. Two Florida WellCare HMOs, StayWell and Healthease, were contracted with the Agency for Health Care Administration to provide Medicaid recipients with certain services, including behavioral health services.
In 2002, the state of Florida enacted a law requiring state Medicaid HMOs to expend eighty percent of the Medicaid premium received from certain behavioral health services on the actual provision of those services to beneficiaries. If the HMO had expended less, they were required to return the money to Medicaid. It was alleged that Bereday and four others conspired to inflate expenditure information in the company’s annual reports to AHCA, so they could reduce WellCare HMOs’ contractual payback obligations.
During the guilty plea, Bereday admitted that he and others knowingly and willfully caused a false expenditure report for the 2006 calendar year to be submitted to the Florida Medicaid Program. The United States reached a resolution with WellCare in May of 2009. The company was ordered to pay $40 million in restitution and to forfeit another $40 million. The company was also ordered to cooperate with the government’s criminal investigation.
The four other defendants were ultimately found guilty after a 13-week trial in June of 2013. The defendants appealed their convictions, but their convictions were affirmed by the Eleventh Circuit in August of 2016. Additional details can be found here.