A Polk County District Court judge upheld the state’s decision to throw out WellCare of Iowa’s Medicaid managed-care contract, according to court documents made available on Monday.
The Tampa-based company was one of four awarded a contract in August 2015 to manage the state’s $5 billion Medicaid program with more than 560,000 enrollees starting March 1, pending federal approval.
Judge Robert Blink on Friday affirmed the state’s December decision, saying there is “substantial evidence” to support the assertion that WellCare failed to disclose information in its bid, including the “true extent” of false claims litigations and details of a corporate integrity agreement.
The U.S. Department of Health and Human Services negotiates corporate integrity agreements with health care providers or entities as part of settlements that arise under a variety of civil false-claims statutes.
In addition, the company also had been ordered to pay $137.5 million in fines.
In October, three companies passed over for contracts argued the bidding process was flawed and biased. An administrative law judge recommended in November that WellCare’s contract be tossed out, citing improper communications between WellCare and state employees as well as failure to disclose the settlement information.
A state arbiter sided with the judge in December.
WellCare has maintained throughout the process that it disclosed the necessary information when asked a clarifying question during the evaluation process and that it did not violate any rules regarding communications.
“The true extent of WellCare’s settlements and the actual details of the (corporate integrity agreements) were not disclosed to (Department of Human Services) until the contested hearing in October 2015,” Blink wrote. “If DHS was unaware of the extent of WellCare’s legal problems until that time, it could not have been fully informed and able to exercise discretion.”
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Blair Todt, WellCare’s senior vice president, chief legal and administrative officer, said in a statement that the company will not pursue additional appeals and instead will look for future growth opportunities outside of Iowa.
“While we disagree with the decision and are disappointed with this ruling, the time has come to move forward,” he said. “WellCare maintains the ruling does not accurately reflect the facts or the integrity of Iowa’s procurement process. While some procedural mistakes were made, the state acknowledged these mistakes did not impact its award decision and has never once questioned WellCare’s ability to provide quality care for Iowans.”
Also in the ruling, the judge denied Meridian Health Plans, one of the companies originally passed over and that had contended the process was flawed, in its request to have its bid re-evaluated and the company considered to take WellCare’s vacated spot.
Meridian argued the evaluation committee — the committee tasked with reviewing and awarding managed-care bids — did not properly score its proposal. It also argued that the committee gave WellCare an opportunity to supplement its bid when asked clarifying questions — an opportunity not given to Meridian.
Blink sided with the state arbiter, who had found the scoring and evaluation to be adequate and logical.
During the first week of February, the state began reassigning the more 130,000 recipients who had been assigned to WellCare.