One Medicare Advantage payer is becoming a cautionary example of just how wrong things can go in the business of managed healthcare.

Florida Healthcare Plus, Inc. has been ordered into state receivership by Judge George Reynolds of the Second Judicial Circuit Court.

The Florida Department of Financial Services, the appointed receiver, will oversee the liquidation of the company next year — as former employees face federal charges related to a $25 million Medicare fraud scheme.

Beginnings
Based in Coral Gables, Florida Healthcare Plus was founded in 2004 by a husband and wife team, orthotist-prosthetist Ray Quirantes and Adelaida-Ramos Quirantes, along with insurance veteran Ted Lyons, who’s currently listed on LinkedIn as the company’s VP of community outreach.

After becoming an HMO in 2007, it had grown to cover more than 9,000 Medicare Advantage beneficiaries, but last January, amid financial woes, Quirantes brought in Susan Molina, a former Anthem SVP and advisor at Triple S Management, to try to turnaround the privately-held company.

And now the company is poised to shut down. Thousands of seniors in greater Miami have to find a new Medicare plan (or some might choose to enroll in traditional Medicare) and hundreds of professionals are out of a job.

FBI came knocking
Florida Healthcare Plus’ problems have been creeping up over the past year. In July, Florida Healthcare Plus was fined $113,000 by the Centers for Medicare & Medicaid Services for inappropriately denying and delaying care and violating Part D drug regulations.

In September, an investigation by the Florida Department of Financial Services found that the company’ assets were being overstated by $4.9 million and its liabilities underreported by $9.8 million; what the company posted as a surplus was actually $11.8 million in debt, the investigation found.

Then in November came the Federal Bureau of Investigations raid and charges of fraud against Pedro Hernandez, Florida Healthcare Plus’ COO until May 2013, Abram Rodriguez, marketing director until April, and Mirna Blanco, a social services manager, along with three other former employees and six other individuals.

According to the FBI and the Justice Department, Hernandez and Rodriguez led a scheme to enroll expatriates living in Nicaragua and the Dominican Republic in Medicare Advantage plans, recruiting both American retirees and native Nicaraguans who came to the U.S. during the 1980s civil war.

The Florida Healthcare Plus employees and contractors flew patients to Miami to create sham addresses and visit a primary care physician involved in the scheme, Santiago Montoya, then billed Medicare for those visits and treatment by foreign doctors, according to the indictment. In total about 1,200 expats were wrapped up in the scheme, and $25 million was billed illegally, according to the government. The defendants are also accused of defrauding Medicaid under a similar scheme.

Hernandez, the former COO, is the alleged mastermind of the scheme, and is being held without bail. Before coming to Florida Healthcare Plus, Hernandez spent eight years at WellCare, another Florida HMO that hosted public healthcare fraud, but nonetheless emerged intact.

‘Never seen anything like it’
While neither Florida Healthcare Plus itself nor any current employees have been charged, the company was something of a cover for the scheme, enrolling many of the 1,200 expats in MA plans and receiving $10.5 million in government payments from the total $25 million in alleged fraud.

Susan Molina had actually ordered an audit earlier in the year, noticed payments to the providers in question and reported the discrepancies to the feds in August. With that, she persuaded the FBI not to freeze the company’s assets, but nonetheless the state is taking it into receivership and liquidation.

“In my 27 years of experience,” Molina told the Miami Herald before the state announced the receivership action, “I've never seen anything like it.”