State takes over Gables firm linked to Medicare fraud scheme

State regulators Wednesday took over a Coral Gables managed-care company with plans to liquidate it after claiming Florida Healthcare Plus was not financially sound.

It was the final blow to a business whose former executives were charged last month with illegally exporting millions of dollars in Medicare benefits to retired U.S. expatriates living in Latin America.

The current management team, which took over in January, declined to comment because state regulators are now in charge of the four-year-old company.

The Department of Financial Services obtained a circuit court order in Tallahassee to place Florida Healthcare Plus under state receivership, the first step before selling off the assets of the business.

Florida Healthcare Plus, with about $130 million in annual revenue collected from the taxpayer-funded federal Medicare program, has about 200 employees whose jobs will soon be lost. The company has 10,000 Medicare beneficiaries who must now be transferred by the state to other managed-care companies.

The current management team said the state suspended membership enrollment in Florida Healthcare Plus in the fall because it had failed to meet a $3 million capitalization requirement. The reported reserves shortfall was only $49,000, company officials said, but it eventually triggered the state takeover.

In an interview before Wednesday’s court ruling, the company’s lawyer, Jaime Guttman, said state insurance regulators were being unreasonable because Florida Healthcare Plus was poised to turn around in the new year.

He said the company was paying medical providers and satisfying Medicare beneficiaries, while conducting serious discussions with potential investors to boost financial reserves.

“The state is being inflexible,” Guttman told the Miami Herald on Tuesday.

Back in January, veteran business executive Susan Rawlings Molina was hired to help turn around the struggling Coral Gables company, which managed healthcare plans for both Medicare and Medicaid patients.

Molina said she soon discovered that Florida Healthcare Plus was making suspiciously large payments to a couple of medical providers and she ordered internal and external audits.

Flash forward to November. Miami federal prosecutors charged six former employees and five others with illegally enrolling beneficiaries with fake Florida addresses so they could receive millions of dollars in healthcare while they were living as retired expatriates in Nicaragua and the Dominican Republic.

Although the company itself was not accused of wrongdoing, a half-dozen former employees, including chief operating officer Pedro Hernandez and marketing director Abram Rodriguez, were charged as members of an international ring that fleeced $25 million from the federal Medicare and state Medicaid programs for the elderly, disabled and poor.

On the day of their arrests, federal agents raided the company's offices to seize records and other evidence. On Nov. 19, federal prosecutors also sought to freeze the bank assets of Florida Healthcare Plus, which would have instantly killed the company.

But Molina and the company's lawyer, Guttman, persuaded the prosecutors to halt the civil action freezing those assets by explaining that Florida Healthcare Plus had reported the wrongdoing to Medicare and the state Office of Insurance Regulation in August — three months before the indictment was unsealed. Medicare officials, however, never informed federal prosecutors, who had been investigating the unprecedented scheme for three years.

“They realized this was a mistake,” Guttman said in a prior interview.

Lead prosecutor Eric Morales said that Florida Healthcare Plus, which operated under the private Medicare Advantage plan, received about $10.5 million in government payments for illegally treating about 1,200 beneficiaries in Nicaragua and the Dominican Republic.

Other unnamed Florida managed-care companies received about $15 million from Medicare in the international scam, Morales said.