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United States v. Clay

United States Court of Appeals for the Eleventh Circuit

August 11, 2016, Decided

No. 14-12373

Opinion

 [*1265]  HULL, Circuit Judge:

In this Medicaid fraud case, defendants Todd Farha, Paul Behrens, [**3]  William Kale, and Peter Clay appeal their convictions on multiple grounds, including insufficient evidence, evidentiary errors, and improper jury instructions. At the time of the fraud, the defendants were all high-level executives of WellCare Health Plans, Inc. ("WellCare") or one of its two Florida subsidiaries. Those subsidiaries were Wellcare of Florida, Inc. doing business as Staywell Health Plan of Florida ("Staywell") and HealthEase of Florida, Inc. ("HealthEase").

At trial, the government proved that together the defendants participated in a fraudulent scheme to file false Medicaid expense reports that misrepresented and overstated the amounts Staywell and HealthEase spent on medical services for Medicaid patients, specifically outpatient behavioral health care services. By overstating these expenses, the defendants helped Staywell and HealthEase retain millions of dollars in tax-subsidized Medicaid funds that they should have refunded to the Florida Agency for Health Care Administration ("AHCA"). This, in turn, inflated the profits of Staywell, HealthEase, and WellCare and earned the defendants financial rewards. The jury found Farha, Behrens, and Kale guilty on two counts [**4]  of substantive health care fraud and found Behrens and Clay guilty on two counts of making false representations or statements.

After reviewing the extensive trial record and with the benefit of oral argument, we affirm the defendants' convictions.

I. PROCEDURAL HISTORY

A. Indictment

On March 2, 2011, a federal grand jury in the Middle District of Florida returned an 11-count indictment against defendants Farha, Behrens, Kale, and Clay. The defendants were executives at WellCare, a publicly-held corporation headquartered in Tampa, Florida. Todd Farha was CEO and President of WellCare and one of its directors. Farha assumed leadership at WellCare in July 2002. Paul Behrens was CFO. Behrens joined WellCare in September 2003. Both Farha and Behrens held similar positions with Staywell and HealthEase, WellCare's two subsidiaries. William Kale was Vice President of Clinical Services at WellCare. Kale joined WellCare in the fall of 2002. Peter Clay joined WellCare in April 2005 as Vice President of Medical Economics and reported to Behrens.

Count 1 of the indictment charged the defendants with conspiracy to defraud the United States, to make false statements relating to health care matters, and [**5]  to commit Medicaid health care fraud from 2003 through 2007, in violation of 18 U.S.C. § 371.2 Counts 2 through 5 charged the defendants with making false statements in Medicaid health care expense reports submitted to state officials, in violation of 18 U.S.C. §§ 1035 and 2. Counts 2 and 3 covered the calendar year ("CY") 2005 reports, and Counts 4 and 5 covered the CY 2006 reports.3

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832 F.3d 1259 *; 2016 U.S. App. LEXIS 14805 **; 26 Fla. L. Weekly Fed. C 606

UNITED STATES OF AMERICA, Plaintiff-Appellee, versus PETER E. CLAY, TODD S. FAHRA, PAUL L. BEHRENS, WILLIAM L. KALE, Defendants-Appellants.

Subsequent History: US Supreme Court certiorari denied by Farha v. United States, 2017 U.S. LEXIS 2644 (U.S., Apr. 24, 2017)

Prior History:  [**1] Appeals from the United States District Court for the Middle District of Florida. D.C. Docket No. 8:11-cr-00115-JSM-MAP-5.

United States v. Kale, 2013 U.S. Dist. LEXIS 144735 (M.D. Fla., Oct. 7, 2013)

Disposition: AFFIRMED.

CORE TERMS

expenses, refund, premium, encounter, behavioral health, reporting, providers, patient, calculations, sub-capitation, qualifying, district court, Counts, capitation, restatement, care service, convictions, defendants', contracts, team, fraudulent, cover letter, email, spent, costs, expended, priced, overhead, codes, outpatient

Criminal Law & Procedure, Trials, Motions for Acquittal, Standards of Review, De Novo Review, Sufficiency of Evidence, Deferential Review, Credibility & Demeanor Determinations, Fraud Against the Government, False Claims, Elements, False Statements, Accessories, Aiding & Abetting, Public Health & Welfare Law, Medicaid, State Plans, Amount, Duration & Scope of Benefits, Criminal Offenses, Fraud, Acts & Mental States, Mens Rea, Knowledge, Jury Instructions, Recklessness, Mail Fraud, Juries & Jurors, Jury Deliberations, Ability to Follow Instructions, Willfulness, Abuse of Discretion, Evidence, Evidence, Types of Evidence, Testimony, Expert Witnesses, Admissibility, Exceptions, Business Records, Admissibility in Criminal Trials