Back to Form 10-Q [form10q.htm]
Exhibit 10.20

SETTLEMENT AGREEMENT
This Settlement Agreement (Agreement) is entered into among the United States of
America, acting through the United States Department of Justice and on behalf of
the Office of Inspector General of the Department of Health and Human Services
(OIG-HHS)(collectively the “United States”), WellCare Health Plans, Inc.,
Comprehensive Health Management, Inc., Comprehensive Reinsurance, Ltd., Harmony
Behavioral Health, Inc., HealthEase of Florida, Inc., WellCare Prescription
Insurance, Inc., WellCare of Connecticut, Inc., WellCare of Florida, Inc.,
WellCare of Georgia, Inc., WellCare of New York, Inc., WellCare of Ohio, Inc.,
Harmony Health Plan of Illinois, Inc., and Harmony Behavioral Health IPA, Inc.
(collectively “WellCare”) and Relators Sean J. Hellein, Clark J. Bolton, Eugene
Gonzalez, and SF United Partners (Relators)(hereafter collectively referred to
as “the Parties”), through their authorized representatives.
RECITALS
                 A.         WellCare is a health maintenance organization (HMO)
headquartered in Tampa, Florida, that services approximately 2.3 million members
enrolled in Medicare and Medicaid plans across the country
                 B.         Pursuant to the qui tam provisions of the False
Claims Act, 31 U.S.C. § 3730(b), Relator Hellein filed U.S. ex rel. Sean Hellein
v. WellCare Health Plans, Inc., et al., Case No. 8:06-cv-01079-T-30TGW (M.D.
Fla.) on June 7, 2006; Relator Bolton filed U.S. ex rel. Clark Bolton v.
WellCare Health Plans, Inc., et al., Case No. 8:07-cv-1909-T-30TGW (M.D. Fla.)
on October 19, 2007; Relator SF United Partners filed U.S. ex rel. SF United
Partners v. WellCare Health Plans, Inc., et al., Case No. 3:07cv1688 (SRU) (D.
Conn.)(UNDER SEAL), on
 
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November 15, 2007; and Relator Gonzalez filed U.S. ex rel. Eugene Gonzalez v.
WellCare Health Plans, Inc., et al., Case No. CV 08 0723 (E.D.N.Y.)(transferred
to M.D. Fla. as Case No. 8:08-cv-1691-T-30-TGW), on February 21, 2008 (the
“Civil Actions”).  The United States intervened either in whole or in part in
the Civil Actions filed by Relators Hellein, Bolton, and Gonzalez on June 24,
2010. The United States will timely intervene in the Civil Action filed by SF
United Partners.
 C.          The United States contends that WellCare submitted or caused to be
submitted claims for payment to the Medicare Program (Medicare), Title XVIII of
the Social Security Act, 42 U.S.C. §§ 1395, et seq., and the Medicaid Program
(Medicaid), Title XIX of the Social Security Act, 42 U.S.C. §§ 1396 - 1396w-5.
 D.         The United States contends that it has certain civil claims against
WellCare arising from WellCare’s submission of false and fraudulent information
in support of false claims to the Medicare and Medicaid programs from January 1,
2004 to June 24, 2010, or where a different period is noted below, during that
period.  These claims relate to allegations that WellCare:

 
1.
Between June 1, 2002 and October 31, 2007, knowingly concealed its contractual
obligation to pay behavioral health care services monies back to the Florida
Agency for Health Care Administration (AHCA) and induced AHCA to grant inflated
premium increases by (a) falsely and fraudulently inflating actual expenses
incurred in providing behavioral health care services to Florida Medicaid
recipients, through use of its subsidiary Harmony Behavioral Health (“HBH”) and
a contract providing

 
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for capitated premiums to HBH at a rate of 85% regardless of actual medical
costs expended, (b) using those improperly inflated expenses in calculating the
relevant medical loss ratio (MLR)(the percentage of every premium dollar spent
on health care), (c) submitting those improperly inflated expenses and/or
improperly calculated loss ratios to AHCA, (d) coordinating its billing
practices with other entities to minimize chances of detection by AHCA, and (e)
retaining monies owed to AHCA;

 
2.
Manipulated WellCare’s MLR by (a) creating a wholly-owned reinsurance subsidiary
that charged higher premiums to WellCare’s affiliates than those paid by
WellCare to independent reinsurers in order to maintain WellCare’s premiums at
higher levels than justified by WellCare’s actual costs, (b) counting
reinsurance profit as a medical expense, (c) under-reporting its profit margin
and misrepresenting its costs, (d) manipulating its Incurred But Not Reported
(IBNR) (an actuarial estimate of claims which have not yet been reported or
paid, but are likely to be incurred within a certain time frame), and (e)
manipulating and falsely reporting its behavioral health MLR;

 
3.
Between October 1, 2003 and October 31, 2007, knowingly concealed its
contractual and statutory obligations to pay monies back to state Medicaid
programs, including the Florida Healthy Kids program and the Illinois Medicaid
program, by (a) including false and fraudulent expenses in its reported MLR
calculations, (b) shifting and misallocating costs, including 

 
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prepayment of medical expenses for future years, (c) entering improper
capitation and payment arrangements, (d) fraudulently increasing the per member
per month cost for over-the-counter pharmacy benefits, and (e) retaining monies
owed to the state Medicaid programs;

 
4.
Falsified encounter data submitted to the state Medicaid programs;

 
5.
Knowingly concealed and retained overpayments received from state Medicaid
programs in violation of its contractual obligations to pay monies back to the
state Medicaid programs, including (a) overpayments for newborn Medicaid
premiums received by WellCare from AHCA between July 1, 2005 and October 31,
2005, (b) overpayments received by WellCare due to overstated membership in the
New York State Family HealthPlus program, and (c) overpayments received by
WellCare as a result of data or programming errors;

 
6.
Paid improper remuneration to physicians, Independent Practice Associations
(IPAs), and other providers through manual adjustments to service funds and
other means, in order to (a) induce the physicians and IPAs to upcode or deny
services to patients, (b) reward the physicians and IPAs for marketing and
switching patients to WellCare in violation of regulations, (c) enable IPAs to
maintain deceased members on the membership rolls and improperly billing and
collecting premium payments for months after the members’ deaths, (d) reward
IPAs who terminate sick patients and send them to other health plans or IPAs,
(e) 

 
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induce IPAs to make political contributions to WellCare’s favored candidates,
and (f) sanction or terminate providers who fail to keep claims payments below
WellCare’s desired threshold;

 
7.
Engaged in sales and marketing abuses by (a) unlawfully disenrolling certain
Medicaid patients and by “cherrypicking” others, (b) marketing in a manner
designed to discriminate among potential enrollees on the basis of such
enrollees’ health status or need for health services, (c) improperly encouraging
dual eligible beneficiaries to change their health plans frequently in order to
generate inflated commissions;

 
8.
Manipulated, and falsely reported to the Centers for Medicare and Medicaid
Services (CMS) and to states, the “grades of service” or similar performance
metrics of WellCare call centers and falsified appeals documentation;

 
9.
Upcoded services, claims, and disease states by manipulating the Risk Adjusted
Payment System (RAPS), which is used by CMS to calculate the per member per
month (PMPM) premium paid to health plans; and

 
10.
Operated a sham Special Investigations Unit (SIU) that (a) failed to perform its
oversight responsibilities with respect to claims submitted to Medicare and
Medicaid by providers and third party administrators, and claims associated with
its Medicare Part D Prescription Drug Plan, (b) used an improper methodology to
compute overpayments received by providers, thereby allowing WellCare to seek
excessive reimbursement 

 
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from the providers, (c) failed to provide the proper notification of settlements
with providers regarding overpayments to government agencies and to remit
settlement funds to the Medicaid and Medicare programs in Florida; and (d)
filing false and misleading fraud prevention plans

The conduct described above, except insofar as it may overlap with the conduct
and allegations set forth in Paragraphs 6.j. and 6.k. below, is herein referred
to as the “Covered Conduct.”
 E.          Except as governed by the terms of the Deferred Prosecution
Agreement dated May 5, 2009 between WellCare and the U.S. Attorney’s Office for
the Middle District of Florida and the Florida Attorney General’s Office, this
Agreement is neither an admission of liability by WellCare nor a concession by
the United States that its claims are not well founded.
 F.          Relators claim entitlement under 31 U.S.C. § 3730(d) to a share of
the proceeds of this Settlement Agreement and to Relators’ reasonable expenses,
attorneys’ fees and costs.
To avoid the delay, uncertainty, inconvenience, and expense of protracted
litigation of the above claims, and in consideration of the mutual promises and
obligations of this Settlement Agreement, the Parties agree and covenant as
follows:

 TERMS AND CONDITIONS

       1.
The Settlement Amount in this case shall consist of a fixed component and
contingent component.

 
a.         Fixed Component:  WellCare shall pay to the United States and States
that execute separate settlement agreements with WellCare to resolve WellCare's

 
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potential state liability for the Covered Conduct (Participating States),  a
collective total of $137.5 million (including the federal share of
$83,980,591.88 and state share of $53,519,408.12), plus interest accruing
annually at 3.125% in four installments, not exceeding 36 months from the
Effective Date of this Agreement.  The first installment payment due under this
Agreement shall be made by electronic funds transfer pursuant to written
instructions to be provided to WellCare by the United States Department of
Justice.  Subject to Paragraph 33 below, all subsequent installment payments
shall be made pursuant to the separate written instructions to be provided to
WellCare by the United States Department of Justice and the National Association
of Medicaid Fraud Control Unit's Team acting on behalf of the Participating
States.  The first installment payment in the amount of $34.375 million plus
accrued interest shall be made within five (5) business days after the Effective
Date of this Agreement as defined in Paragraph 31 (Initial Fixed Payment Date);
the second installment in the amount of $34.375 million plus accrued interest
shall be made on or before the one year anniversary of the Initial Fixed Payment
Date; and the third installment in the amount of $34.375 million plus accrued
interest shall be made on or before the two year anniversary of the Initial
Fixed Payment Date; the fourth and final installment payment in the amount of
$34.375 million plus accrued interest shall be made on or before the third year
anniversary of the Initial Fixed Payment Date.  Interest shall begin to accrue
as of December 22, 2010, when counsel for the United States notified counsel for
WellCare in writing that the Government had received 

 
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settlement authority from the United States Department of Justice.  WellCare may
accelerate payments under the fixed component provision without penalty.

 
b.    Contingent Component:  (i) In the event of a change in control (a “CIC,”
as defined below) prior to completing payment of the final Fixed Component of
the Agreement, WellCare will pay any outstanding amount due under the Fixed
Component of the Agreement with a credit for any interest not yet accrued or
owing.  (ii) In addition, if within 36 months of the Effective Date of the
Agreement there is a CIC for an amount equal to or greater than the aggregate
market capital value of WellCare common stock as existed as of the close of
market trading on the New York Stock Exchange (4:00 p.m. Eastern Daylight Time)
on June 24, 2010, WellCare will pay the United States and the Participating
States an additional $35 million dollars within five (5) business days of the
CIC.  For the purposes of this paragraph and calculation, the aggregate market
capitalization value of WellCare on June 24, 2010 at the end of the trading
period (4 p.m. EDT) was $1,129,841,928.30, based on a closing price of WellCare
common stock of $26.63 on the New York Stock Exchange, multiplied by 42,427,410
issued and outstanding shares of WellCare’s common stock that were issued and
outstanding as of June 24, 2010.  (iii) For purposes of this paragraph, a CIC
shall mean (A) the date of acquisition of legal title of more than 50 percent of
WellCare’s then issued and outstanding common stock by a person, entity or group
(as such terms are defined in Section 13(d)(3) of the Securities Exchange Act of
1934); (B) a merger, reorganization, consolidation, or similar

 
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    transaction resulting in a business combination where WellCare shareholders
before the transaction own less than 50 percent of the new entity, or a person,
entity, or group own more than 50 percent of the shares of the new entity; or
(C) a sale of substantially all of WellCare’s assets to an unrelated third party
or unrelated third parties.  WellCare will provide the United States with
written notice of the anticipated contingent payment at least 30 days before a
CIC.  After receiving written notice of the anticipated contingent payment from
WellCare, the United States will promptly provide WellCare with written
instructions for the transmittal of the contingent payment.    2.
WellCare’s obligation to pay Relator expenses, attorneys’ fees and/or costs (if
any), shall be determined at a later date and is not affected by this Agreement.
   3.
Subject to the exceptions in Paragraph 6 (concerning excluded claims) below, and
conditioned upon WellCare’s full payment of the Settlement Amount, the United
States releases WellCare from any civil or administrative monetary claim the
United States has for the Covered Conduct under the   False Claims Act, 31
U.S.C. §§ 3729-3733; the Civil Monetary Penalties Law, 42 U.S.C. § 1320a-7a; the
Program Fraud Civil Remedies Act, 31 U.S.C.  §§3801-3812; or the common law
theories of payment by mistake, unjust enrichment, and fraud.
   4. Subject to the exeptions in Paragraph 6 below, and conditioned upon
WellCare's full payment of the Settlement Amount, Relators, for themselves and
their heirs, successors, attorneys, agents and assigns, release WellCare from
any civil monetary claim the Relators have on behalf of the United States for
the Covered Conduct under the False Claims Act, 31 U.S.C. §§ 3729-3733.

 
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 5.          In consideration of the obligations of WellCare in this Agreement
and the Corporate Integrity Agreement (CIA), entered into between OIG-HHS and
WellCare,   conditioned upon WellCare’s full payment of the Settlement Amount,
OIG-HHS agrees to release and refrain from instituting, directing, or
maintaining any administrative action seeking exclusion from Medicare, Medicaid,
and other Federal health care programs (as defined in 42 U.S.C. § 1320a-7b(f))
against WellCare under 42 U.S.C. § 1320a-7a (Civil Monetary Penalties Law) or 42
U.S.C. § 1320a-7(b)(7) (permissive exclusion for fraud, kickbacks, and other
prohibited activities) for the Covered Conduct, except as reserved in Paragraph
6 (concerning excluded claims), below, and as reserved in this
Paragraph.  OIG-HHS expressly reserves all rights to comply with any statutory
obligations to exclude WellCare from Medicare, Medicaid, and other Federal
health care programs under 42 U.S.C. § 1320a-7(a) (mandatory exclusion) based
upon the Covered Conduct.  Nothing in this Paragraph precludes OIG-HHS from
taking action against entities or persons, or for conduct and practices, for
which claims have been reserved in Paragraph 6, below.
 6.          Notwithstanding the releases given in paragraphs 3 through 5 of
this Agreement, or any other term of this Agreement, the following claims of the
United States are specifically reserved and are not released:
 
a.
Any liability arising under Title 26, U.S. Code (Internal Revenue Code);

 
b.
Any criminal liability;

 
c.
Except as explicitly stated in this Agreement, any administrative liability,
including mandatory exclusion from Federal health care programs;

 
d.
Any liability to the United States (or its agencies) for any conduct other

 
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than the Covered Conduct;

 
e.
Any liability based upon obligations created by this Agreement;

 
f.
Any liability for express or implied warranty claims or other claims for
defective or deficient products or services, including quality of goods and
services;

 
g.
Any liability for failure to deliver goods or services due;

 
h.
Any liability for personal injury or property damage or for other consequential
damages arising from the Covered Conduct;

 
i.
Any liability of individuals;

 
j.
Any claims or liabilities arising from the allegations against Wellcare or
Wellcare-affiliated defendants in any of the qui tam actions listed in the
letter from the U.S. Department of Justice to WellCare dated April 26, 2011; or

 
k.
Claims or liabilities arising from (i) Wellcare's claims for payment to the
Hawaii Medicaid program for deceased beneficiaries, or (ii) services provided to
Medicaid beneficiaries for which the Hawaii Medicaid program paid twice, once
under a Wellcare managed care contract, and again under a fee-for-service
program.

                 7.           Relators and their heirs, successors, attorneys,
agents, and assigns do not and shall not object to this Agreement and confirm
that this Agreement is fair, adequate, and reasonable under all the
circumstances, pursuant to 31 U.S.C. § 3730(c)(2)(B).  In connection with this
Agreement and the Civil Actions, Relators and their heirs, successors,
attorneys, agents, and assigns agree that neither this Agreement, any
intervention by the United States in any individual
 
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Civil Action, nor any dismissal of any Civil Action, shall waive or otherwise
affect the ability of the United States to contend that provisions in the False
Claims Act, including 31 U.S.C. §§ 3730(d)(3) and 3730(e), bar Relators from
sharing in the proceeds of this Agreement.  Moreover, the United States and
Relators and their heirs, successors, attorneys, agents, and assigns agree that
they each retain all of their rights pursuant to the False Claims Act on the
issue of the share percentage, if any, that Relators should receive of any
proceeds of the settlement of their claim(s).
 8.           Relators, for themselves, and for their heirs, successors,
attorneys, agents, and assigns, release WellCare, and its officers, agents, and
employees, from any liability to Relators arising from the Civil Actions, or
under 31 U.S.C. § 3730(d), except for expenses or attorneys’ fees and costs.
 9.           WellCare waives and shall not assert any defenses WellCare may
have to any criminal prosecution or administrative action relating to the
Covered Conduct that may be based in whole or in part on a contention that,
under the Double Jeopardy Clause in the Fifth Amendment of the Constitution, or
under the Excessive Fines Clause in the Eighth Amendment of the Constitution,
this Agreement bars a remedy sought in such criminal prosecution or
administrative action.  Nothing in this paragraph or any other provision of this
Agreement constitutes an agreement by the United States concerning the
characterization of the Settlement Amount for purposes of the Internal Revenue
laws, Title 26 of the United States Code.
 10.         During the course of negotiations of this Agreement, up to and
including the Effective Date of this Agreement, WellCare has provided numerous
financial materials and disclosures (collectively “Financial Statements”).  The
United States has relied on the accuracy
 
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and completeness of those Financial Statements in reaching this
Agreement.  WellCare warrants that the Financial Statements were complete and
materially accurate as of the date they were produced to the United States or
publicly filed.  The United States understands, however, that some of the
Financial Statements provided by WellCare included "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended ("Forward Looking
Statements").  Accordingly, to the degree that Forward Looking Statements were
made in any Financial Statements, WellCare warrants only to the United States
that such Forward Looking Statements were made by WellCare in good faith and
without actual knowledge that such Forward Looking Statements were false or
misleading.  If the United States learns of any material nondisclosure or
misrepresentation by WellCare on, or in connection with, the Financial
Statements, and if such material nondisclosure or misrepresentation resulted in
the underreporting of WellCare's total net assets by $6,875,000 (5% of the
Settlement Amount) or more, the United States may at its option pursue relief
under this Paragraph as follows: (a) the United States will provide WellCare
with written notice of the nature of the Material Nondisclosure or Material
Misrepresentation; (b) within ten (10) calendar days of the date of the written
notice, WellCare shall provide the United States, in writing, with any
explanation it may have regarding the Material Nondisclosure or Material
Misrepresentation referenced in the written notice; (c) if unsatisfied with
WellCare’s explanation, as determined in its sole and absolute discretion, the
United States may file an action seeking relief under this Paragraph in which
action the United States shall bear the burden of establishing by a
preponderance of the evidence the Material Nondisclosure or Material
Misrepresentation.  If the United States files such an action and establishes,
by a preponderance of the evidence, a Material
 
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Nondisclosure or Material Misrepresentation, then (i) the Settlement Amount
shall be increased by one hundred percent (100%) of the amount of the Material
Nondisclosure or Material Misrepresentation; (ii) the remaining unpaid principal
portion of the Settlement Amount shall become accelerated and immediately due
and payable, with interest at a simple rate of 5% from the Effective Date of
this Agreement to the date of the court finding, and at the Medicare interest
rate (per 42 C.F.R. part 405.378) from the date of the court finding until the
date of payment; (iii) the United States may offset the remaining unpaid balance
of the Settlement Amount (inclusive of interest) from any amounts due and owing
to WellCare by any department, agency, or agent of the United States; and (iv)
WellCare shall immediately pay the United States all reasonable costs incurred
in the action seeking relief under this Paragraph, including attorneys’ fees and
costs.
 11.        In the event that the United States, pursuant to Paragraph 10
(concerning disclosure of assets), above, opts to rescind this Agreement,
WellCare agrees not to plead, argue, or otherwise raise any defenses under the
theories of statute of limitations, laches, estoppel, or similar theories, to
any civil or administrative claims that (a) are filed by the United States
within 90 calendar days of written notification to WellCare that this Agreement
has been rescinded, and (b) relate to the Covered Conduct, except to the extent
these defenses were available on the Effective Date of this Agreement.
 12.        WellCare fully and finally releases the United States, and its
agencies, employees, servants, and agents from any claims (including attorney’s
fees, costs, and expenses of every kind and however denominated) that WellCare
has asserted, could have asserted, or may assert in the future against the
United States, and its agencies, employees, servants, and agents, related to the
Covered Conduct and the United States’ investigation and prosecution thereof.
 
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                 13.        The Settlement Amount shall not be decreased as a
result of the denial of claims for payment now being withheld from payment by
any Medicare carrier or intermediary, or any state payer, related to the Covered
Conduct; and WellCare agrees not to resubmit to any Medicare carrier or
intermediary or any state payer any previously denied claims related to the
Covered Conduct, and agrees not to appeal any such denials of claims.
 
14.
WellCare further agrees to the following:

 
a.
Unallowable Costs Defined: All costs (as defined in the Federal Acquisition
Regulation, 48 C.F.R. § 31.205-47; and in Titles XVIII and XIX of the Social
Security Act, 42 U.S.C. §§ 1395-1395kkk and 1396-1396w-5; and the regulations
and official program directives promulgated thereunder) incurred by or on behalf
of WellCare, its present or former officers, directors, employees, shareholders,
and agents in connection with:

 
(i)
the matters covered by this Agreement and the May 5, 2009 Deferred Prosecution
Agreement between WellCare and the United States;

 
(ii)
the United States’ audit(s) and civil and criminal investigation(s) of the
matters covered by this Agreement;

 
(iii)
WellCare’s investigation, defense, and corrective actions undertaken in response
to the United States’ audit(s) and civil and criminal investigation(s) in
connection with the matters covered by this Agreement (including attorneys’
fees)

 
(iv)
the negotiation and performance of this Agreement and the May 5, 2009 Deferred
Prosecution Agreement;

 
 

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(v)
the payments WellCare makes to the United States pursuant to this Agreement and
any payments that WellCare may make to Relators, including costs and attorneys’
fees; and

 
(vi)
the negotiation of, and obligations undertaken pursuant to the CIA to:

 
(A)
retain an independent review organization to perform annual reviews as described
in Section III of the CIA; and

 
(B)
prepare and submit reports to the OIG-HHS, are unallowable costs for government
contracting purposes and under the Medicare Program, Medicaid Program, TRICARE
Program, and Federal Employees Health Benefits Program (FEHBP) (hereinafter
referred to as Unallowable Costs).  However, nothing in this paragraph 14.a.(6)
that may apply to the obligations undertaken pursuant to the CIA affects the
status of costs that are not allowable based on any other authority applicable
to WellCare

 
 
b.         Future Treatment of Unallowable Costs:  Unallowable Costs shall be
separately determined and accounted for in nonreimbursable cost centers by
WellCare, and WellCare shall not charge such Unallowable Costs directly or
indirectly to any contracts with the United States or any State Medicaid
program, or seek payment for such Unallowable Costs through any cost report,
cost statement, information statement, or payment request submitted by WellCare
or any of its subsidiaries or affiliates to the Medicare, Medicaid, TRICARE, or

 
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FEHBP Programs.
c.            Treatment of Unallowable Costs Previously Submitted for Payment:
WellCare further agrees that within 90 days of the Effective Date of this
Agreement it shall identify to applicable Medicare and TRICARE fiscal
intermediaries, carriers, and/or contractors, and Medicaid and FEHBP fiscal
agents, any Unallowable Costs (as defined in this Paragraph) included in
payments previously sought from the United States, or any State Medicaid
program, including, but not limited to, payments sought in any cost reports,
cost statements, information reports, or payment requests already submitted by
WellCare or any of its subsidiaries or affiliates, and shall request, and agree,
that such cost reports, cost statements, information reports, or payment
requests, even if already settled, be adjusted to account for the effect of the
inclusion of the unallowable costs.  WellCare agrees that the United States, at
a minimum, shall be entitled to recoup from WellCare any overpayment plus
applicable interest and penalties as a result of the inclusion of such
Unallowable Costs on previously-submitted cost reports, information reports,
cost statements, or requests for payment.
Any payments due after the adjustments have been made shall be paid to the
United States pursuant to the direction of the Department of Justice and/or the
affected agencies.  The United States reserves its rights to disagree with any
calculations submitted by WellCare or any of its subsidiaries or affiliates on
the effect of inclusion of Unallowable Costs (as defined in this Paragraph) on
WellCare or any of its subsidiaries or affiliates’ cost reports, cost
statements, or

 
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information reports.

 
d.            Nothing in this Agreement shall constitute a waiver of the rights
of the United States to audit, examine, or re-examine WellCare’s books and
records to determine that no Unallowable Costs have been claimed in accordance
with the provisions of this Paragraph.

 15.        WellCare agrees to cooperate fully and truthfully with the United
States’ investigation of individuals and entities not released in this
Agreement.  Upon reasonable notice, WellCare shall encourage, and agrees not to
impair, the cooperation of its directors, officers, and employees, and shall use
its best efforts to make available, and encourage, the cooperation of former
directors, officers, and employees for interviews and testimony, consistent with
the rights and privileges of such individuals.  WellCare further agrees to
furnish to the United States, upon request, complete and unredacted copies of
all non-privileged documents, reports, memoranda of interviews, and records in
its possession, custody, or control concerning any investigation of the Covered
Conduct that it has undertaken, or that has been performed by another on its
behalf. WellCare further agrees to provide prompt, complete, and truthful
testimony, certifications, and/or other non-privileged information, as required
by the United States, necessary to identify or establish the location,
authenticity, or evidentiary foundation to admit into evidence documents in any
proceeding relating to matters within the Covered Conduct.
 16.        This Agreement is intended to be for the benefit of the Parties
only.  The Parties do not release any claims against any other person or entity,
except to the extent provided for in Paragraph 17 (waiver for beneficiaries
paragraph), below.
                 17.        WellCare agrees that it waives and shall not seek
payment for any of the health
 
AGREEMENT BETWEEN
WELLCARE, THE UNITED STATES
AND RELATORS

 
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care billings covered by this Agreement from any health care beneficiaries or
their parents, sponsors, legally responsible individuals, or third party payors
based upon the claims defined as Covered Conduct.
 18.        WellCare warrants that it has reviewed its financial situation and
that it currently is solvent within the meaning of 11 U.S.C. §§ 547(b)(3) and
548(a)(1)(B)(ii)(I), and shall remain solvent immediately following payment to
the United States of the Settlement Amount.  Further, the Parties warrant that,
in evaluating whether to execute this Agreement, they (a) have intended that the
mutual promises, covenants, and obligations set forth constitute a
contemporaneous exchange for new value given to WellCare, within the meaning of
11 U.S.C. §§ 547(c)(1), and (b) conclude that these mutual promises, covenants,
and obligations do, in fact, constitute such a contemporaneous
exchange.  Further, the Parties warrant that the mutual promises, covenants, and
obligations set forth herein are intended to and do, in fact, represent a
reasonably equivalent exchange of value that is not intended to hinder, delay,
or defraud any entity to which WellCare was or became indebted to on or after
the date of this transfer, within the meaning of 11 U.S.C. § 548(a)(1).
 19.        In the event WellCare or any other party commences, within 91 days
of the Effective Date of this Agreement (defined below), or of any payment made
hereunder, any case, proceeding, or other action under any law relating to
bankruptcy, insolvency, reorganization or relief of debtors, (a) seeking to have
any order for relief of WellCare's debts, or seeking to adjudicate WellCare as
bankrupt or insolvent, or (b) seeking appointment of a receiver, trustee,
custodian or other similar official for WellCare for all or any substantial part
of its assets, WellCare agrees as follows:
 
AGREEMENT BETWEEN
WELLCARE, THE UNITED STATES
AND RELATORS

 
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                              a.         WellCare's obligations under this
Agreement may not be avoided pursuant to 11 U.S.C. §§ 547 or 548, and WellCare
will not argue or otherwise take the position in any such case, proceeding or
action that: (i) WellCare's obligations under this Agreement may be avoided
under 11 U.S.C. §§ 547 or 548; (ii) WellCare was insolvent at the time this
Agreement was entered into, or became insolvent as a result of the payment made
to the United States hereunder; or (iii) the mutual promises, covenants and
obligations set forth in this Agreement do not constitute a contemporaneous
exchange for new value given to WellCare;
                              b.         In the event that WellCare's
obligations hereunder are avoided for any reason, including, but not limited to,
the exercise of a trustee's avoidance powers under the Bankruptcy Code, the
United States, at its sole option, may rescind the releases in this Agreement,
and bring any civil and/or administrative claim, action or proceeding against
WellCare for the claims that would otherwise be covered by the releases provided
in this Agreement.  If the United States chooses to do so, WellCare agrees that,
for purposes only of any case, action, or proceeding referenced in the first
clause of this Paragraph, (i) any such claims, actions or proceedings brought by
the United States (including any proceedings to exclude WellCare from
participation in Medicare, Medicaid, or other Federal Health Care programs) are
not subject to an “automatic stay” pursuant to 11 U.S.C. Section 362(a) as a
result of the action, case or proceeding described in the first clause of this
Paragraph, and that WellCare will not argue or otherwise contend that the United
States' claims, actions or proceedings are subject to an automatic stay; (ii)
that WellCare will not plead, argue or otherwise raise any defenses under the
theories of statute of limitations, laches, estoppel or similar theories, to any
such civil or administrative claims, actions or proceedings which are
 
AGREEMENT BETWEEN
WELLCARE, THE UNITED STATES
AND RELATORS

 
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brought by the United States within 30 calendar days of written notification to
WellCare that the releases herein have been rescinded pursuant to this
Paragraph, except to the extent such defenses were available before the
Effective Date of this Agreement; and (iii) the United States and the
Participating States have valid claims against WellCare in at least the
aggregate amount of the Settlement Amount and they may pursue their claims,
inter alia, in the case, action or proceeding referenced in the first clause of
this Paragraph, as well as in any other case, action, or proceeding; and
                              c.         WellCare acknowledges that its
agreement in this Paragraph is provided in exchange for valuable consideration
provided in this Agreement.
 20.        In the event that WellCare fails to pay any and all of the payments
(including both fixed and contingent components) owed pursuant to this Agreement
within 15 calendar days of the due date, Wellcare shall be in “Default” of this
Agreement.  Furthermore, in the event of Default,
 
a.
any dismissals as to WellCare shall, at the United States' option, be null and
void, and the Settlement Amount referenced in Paragraph 1 above, less any
payments already made, shall become immediately due and payable and shall bear
interest at the Medicare interest rate (per 42 C.F.R. part 405.378) as of the
date of Default until payment of the Settlement Amount is made in full.

 
b.
the United States may at its option: 1) rescind its releases; 2) offset the
remaining unpaid balance of the Settlement Amount from any amounts due and owing
to WellCare by any department, agency, or agent of the United

 
AGREEMENT BETWEEN
WELLCARE, THE UNITED STATES
AND RELATORS

 
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States or Participating States at the time of Default; 3) reinstitute an action
or actions against WellCare in this Court; and 4) WellCare agrees not to contest
any draw, offset, or collection action undertaken by the United States pursuant
to this Paragraph, either administratively or in any court.

 
c.
WellCare agrees to pay the United States all reasonable costs of collection and
enforcement of this Agreement, including attorneys' fees and expenses.  In the
event the United States reinstitutes an action under this Paragraph, WellCare
expressly agrees not to plead, argue, or otherwise raise any defense under the
theories of statute of limitations, laches, estoppel, or similar theories, to
any civil or administrative claims, which: (a) are filed by the United States
within 90 calendar days of written notification to WellCare that this Agreement
has been made a nullity, and (b) relates to the Covered Conduct, except to the
extent these defenses were available on the Effective Date of this Agreement.

 
d.
OIG-HHS may exclude WellCare from participating in all Federal health care
programs until WellCare pays the Settlement Amount and reasonable costs as set
forth above and in Paragraph 1, above.  OIG-HHS will provide written notice of
any such exclusion to WellCare.  WellCare waives any further notice of the
exclusion under 42 U.S.C. § 1320a-7(b)(7), and agrees not to contest such
exclusion either administratively or in any state or federal court.
Reinstatement to program participation is not automatic. If at the end of the
period of exclusion WellCare wishes to apply for

 
AGREEMENT BETWEEN
WELLCARE, THE UNITED STATES
AND RELATORS

 
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reinstatement, WellCare must submit a written request for reinstatement to
OIG-HHS in accordance with the provisions of 42 C.F.R. §§
1001.3001-.3005.  WellCare will not be reinstated unless and until OIG-HHS
approves such request for reinstatement.

                 21.         Should no Relator object to this Settlement, upon
receipt of the initial payment described in Paragraph 1, above, the United
States and Relators shall promptly sign and file in the Civil Actions a Joint
Stipulation of Dismissal of the Civil Actions pursuant to Rule 41(a)(1).  The
dismissal by the United States shall be with prejudice as to the claims
identified as “Covered Conduct” in Paragraph D above and without prejudice as to
all other claims in the Civil Actions filed against WellCare.  The dismissal by
Relators shall be with prejudice as to the entire Civil Action filed against
WellCare by each Relator, except that Relators reserve their right (if any) to
seek attorneys’ fees and costs under 31 U.S.C. § 3730(d)(1).  Furthermore, the
Stipulations of Dismissals filed in the Civil Actions shall be subject to all of
the terms of this Agreement, including the timely payment of all Fixed and
Contingent Settlement Amounts.  The rights and obligations of the Participating
States, including the dismissal of state False Claims Act causes of action that
were asserted in by Relators in the Civil Actions, will be addressed in separate
state settlement agreements.
 22.        Each Party shall bear its own legal and other costs incurred in
connection with this matter, including the preparation and performance of this
Agreement.
 23.        Each party and signatory to this Agreement represents that it freely
and voluntarily enters in to this Agreement without any degree of duress or
compulsion.
 24.        This Agreement is governed by the laws of the United States.  The
exclusive
 
AGREEMENT BETWEEN
WELLCARE, THE UNITED STATES
AND RELATORS

 
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jurisdiction and venue for any dispute relating to this Agreement is the United
States District Court for the Middle District of Florida, except that
jurisdiction and venue for any dispute relating exclusively to the qui tam
complaint filed by SF United Partners shall be in the United States District
Court for the District of Connecticut.  For purposes of construing this
Agreement, this Agreement shall be deemed to have been drafted by all Parties to
this Agreement and shall not, therefore, be construed against any Party for that
reason in any subsequent dispute
 25.        This Agreement constitutes the complete agreement between the
Parties.  This Agreement may not be amended except by written consent of the
Parties.
 26.        The undersigned counsel represent and warrant that they are fully
authorized to execute this Agreement on behalf of the persons and entities
indicated below.
 27.        This Agreement may be executed in counterparts, each of which
constitutes an original and all of which constitute one and the same Agreement.
 28.        This Agreement is binding on WellCare’s successors, transferees,
heirs, and assigns.
 29.        This Agreement is binding on Relators’ successors, transferees,
heirs, and assigns.
 30.        All parties consent to the United States’ disclosure of this
Agreement, and information about this Agreement, to the public.
 31.        The Effective Date of this Agreement shall be as follows.  If no
Relator objects to, or otherwise demands a hearing regarding this settlement,
the Effective Date shall be the date of signature of the last signatory to the
Agreement (Effective Date of this Agreement).  For the purposes of this
paragraph, the signatories to the Agreement are the United States, WellCare and
its counsel, and the Relators to the Civil Actions and their counsel.  For the
purposes of this
 
AGREEMENT BETWEEN
WELLCARE, THE UNITED STATES
AND RELATORS

 
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agreement, a Relator will be deemed to have objected to the Agreement if the
Relator fails to sign and return the Agreement to the United States on the date
specified by the U.S. Department of Justice.  Facsimiles of signatures shall
constitute acceptable, binding signatures for purposes of this
Agreement.  However, should any Relator object to this settlement, or demand any
hearing regarding this settlement, then the Effective Date shall be the date on
upon which the Court approves this settlement, whether by oral pronouncement,
written ruling, or otherwise, which settlement includes an executed stipulation
of dismissal of the Civil Actions.  If any Relator objects and the Court does
not approve the settlement, this Agreement is null and void and the Parties
mutually release each other from any obligations owed under this Agreement
 32.        Should any Relator object to this settlement, or demand any hearing
regarding this settlement, or should the Court for any other reason hold a
hearing regarding this settlement, then WellCare agrees that it will, at its own
expense, support any effort of the United States and the Participating States to
defend the fairness, adequacy, and reasonableness of this settlement including,
as necessary, the filing of briefs, attendance at hearings, and presentation of
evidence.
 33.        In the event that any Relator asserts an objection or otherwise
demands a hearing regarding this settlement (see paragraph 31 above) and the
District Court issues a ruling approving the settlement agreement and triggering
the Effective Date, WellCare shall pay the first installment payment plus
accrued interest (as described in paragraph 1.a.), and any other installment
payments that come due during the pendency of any appeals, into escrow in an
interest-bearing escrow account for which the United States Attorney's Office
for the Middle District of Florida (USAO), or, at the USAO's discretion, the
Clerk of the United States District Court for the Middle District of Florida or
other USAO designee, shall serve as the escrow agent.  The USAO or its
designated escrow agent shall hold all such installment payments plus accrued
 
AGREEMENT BETWEEN
WELLCARE, THE UNITED STATES
AND RELATORS

 
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interest in such escrow account.  Funds held in escrow pursuant to this
paragraph shall not be disbursed to the United States or any Participating State
until: (a) the District Court presiding over the objection issues a ruling
approving the settlement agreement under § 3730(c)(2)(B) and overruling the
objection of any and all objecting Relators and the time for any party to appeal
such ruling to the U.S. Court of Appeals or U.S. Supreme Court runs without the
timely filing of a notice of appeal or petition of certiorari; or (b) in the
event of a timely appeal or petition of certiorari, the highest available court
affirms the approval of the settlement agreement and all time periods for
motions for reconsideration or rehearing or for further appeals have
expired.  If any Court sustains the objection of any relator and any right of
the United States to appeal has expired, the USAO shall direct that the escrow
agent return all funds plus accrued interest to WellCare within 5 business days
of the entry of such an order, pursuant to written instructions to be provided
by WellCare to the USAO, unless WellCare directs the escrow agent otherwise in
writing.  WellCare shall copy the USAO on its written instructions to the escrow
agent.
THE UNITED STATES OF AMERICA
 
 
DATED:
 4/26/11    /s/ Allie Pang  

 
Allie Pang
Trial Attorney
Commercial Litigation Branch
Civil Division
United States Department of Justice

 DATED:
 4/25/2011
 
 /s/ Charles T. Harden III
 

 
Charles T. Harden III
Assistant U.S. Attorney
Middle District of Florida

 
AGREEMENT BETWEEN
WELLCARE, THE UNITED STATES
AND RELATORS

 
 
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DATED:
 4/26/11    /s/ Richard M. Molot  

 
Richard M. Molot
Assistant U.S. Attorney
District of Connecticut

 DATED:
 4/26/11
 
 /s/ Gregory E. Demske
 

 
Gregory E. Demske
Assistant Inspector General for Legal Affairs
Office of Counsel to the
    Inspector General
Office of Inspector General
United States Department of
    Health and Human Services

 
AGREEMENT BETWEEN
WELLCARE, THE UNITED STATES
AND RELATORS

 
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WELLCARE HEALTH PLANS, INC.
 
 
DATED:
April 19, 2011    /s/ Timothy S. Susanin  

 
Timothy S. Susanin
Senior Vice President, General Counsel
WellCare Health Plans, Inc.

 
 
 
DATED:
4/19/11  
 /s/ John C. Richter
 

 
John C. Richter
Vice President and Chief Litigation Counsel
WellCare Health Plans, Inc.

 
 
 
DATED:
 April 19, 2011  
 /s/ L. Joseph Loveland
 

 
L. Joseph Loveland
King & Spalding LLP
1180 Peachtree Street NE
Atlanta, Georgia 30309

 
 
 
DATED:
 4/19/11  
 /s/ Jonathan L. Diesenhaus
 

 
Jonathan L. Diesenhaus
Hogan Lovells LLP
555 Thirteen Street, NW
Washington, DC 20004

 
 
 
DATED:
 4/19/11  
 /s/ Gregory W. Kehoe
 

 
Gregory W. Kehoe
Greenberg Traurig LLP
Courthouse Plaza
Suite 100
625 East Twiggs Street
Tampa, FL 33602

 
AGREEMENT BETWEEN
WELLCARE, THE UNITED STATES
AND RELATORS

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RELATOR SEAN HELLEIN
 
 

 3/23/2012   BY:  /s/ Sean Hellein   Date     Sean Hellein       Relator  

 
 
 

 3/23/2012   BY:  /s/ Barry A. Cohen   Date     Barry A. Cohen      
Kevin Darken
Cohen, Foster & Romine, P.A.
Counsel for Relator
 

 
 
 

 3/23/2012   BY:  /s/ Daniel Gasti   Date     Daniel Gasti       Counsel for
Relator  

 
 
 
 
AGREEMENT BETWEEN
WELLCARE, THE UNITED STATES
AND RELATORS

 
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RELATOR CLARK J. BOLTON

 

 4/8/11      /s/ Clark J. Bolton   Date     Clark J. Bolton       Relator  

 
 

 4/10/11      /s/ Chris Hoyer   Date     Chris Hoyer      
Elaine Stromgren
James, Hoyer, Newcomer & Smiljanich, P.A.
Counsel for Relator
 

 
AGREEMENT BETWEEN
WELLCARE, THE UNITED STATES
AND RELATORS

 
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RELATOR SF UNITED PARTNERS
 

 4/14/11
 
 /s/ Eric D. Fader  

Date
For Relator SF United Partners
Eric D. Fader

 

 April 14, 2011
 
 /s/ Jock Ferguson
 

Date
For Relator SF United Partners
Jock Ferguson

 April 14, 2011
 
 /s/ Dina McKenna
 

Date
For Relator SF United Partners
Dina McKenna

 4/14/11
 
 /s/ Diane Schulman Davidow
 

Date
For Relator SF United Partners
Diane Schulman Davidow

 

 4/14/11
 
 /s/ Suzanne E. Durrell
 

Date
Suzanne E. Durrell
Counsel for Relator

 4/14/11
 
 /s/ Robert M. Thomas, Jr.
 

Date
Robert M. Thomas, Jr.
Counsel for Relator

 
AGREEMENT BETWEEN
WELLCARE, THE UNITED STATES
AND RELATORS

 
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RELATOR EUGENE GONZALEZ
 
 

 April 13, 2011
 
 /s/ Eugene Gonzalez
 

Date
Eugene Gonzalez
Relator

 
 

 4/15/2011
 
 /s/ Cliff Johnson
 

 
AGREEMENT BETWEEN
WELLCARE, THE UNITED STATES
AND RELATORS

 
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