Lawyers in Hope Florida Medicaid settlement distanced clients from rushed deal

Miami Herald

4 days ago

As DeSantis administration officials scrambled last year to craft a Medicaid overbilling settlement that diverted millions to the Hope Florida Foundation, lawyers for healthcare contractor Centene and the Florida Attorney General's Office tried to distance their clients from the agreement, a trove of newly released records shows.
Over 22 days in September, then-Chief Deputy Attorney General John Guard repeatedly removed references to his office in drafts of the settlement passed among negotiators.
Centene's lawyers inserted language emphasizing that the company was 'directed by the state' to donate $10 million of its $67 million settlement to the foundation. The attorneys insisted that Florida's Office of Inspector General or attorney general be mentioned in the agreement.
And they inserted language absolving the company from liability in 'any dispute that may arise' from how the money was used.
The haggling was prescient. When the settlement was revealed this year, it ignited a firestorm among Republican lawmakers. Nearly all the $10 million donation to the state-created Hope Florida Foundation was diverted to a political committee created by Gov. Ron DeSantis' then-chief of staff James Uthmeier to run ads opposing last year's recreational marijuana ballot initiative.
A top GOP lawmaker accused the DeSantis administration of illegally laundering federal Medicaid funds, and former federal prosecutors have said the transactions may have been illegal. Prosecutors in Tallahassee launched a criminal investigation related to the claims.
The agreement had ramifications in Washington, as well. Guard, who eventually signed the settlement, has seen his nomination by President Donald Trump for federal judge held up after Republican U.S. Sen. Rick Scott said he should face questions about it. Guard declined to comment.
Emails and draft settlement agreements included among 1,000 pages of records reviewed by the Herald/Times detail how DeSantis' administration crafted the unusual legal settlement last fall, as mail-in ballots were set to go out to voters. At the time, DeSantis was crisscrossing Florida and spending millions of taxpayer dollars on ads to defeat an initiative that would legalize recreational marijuana.
Centene and outside lawyers had asked the state repeatedly since 2021 to settle the company's claims that it overbilled Florida for prescription drugs, records show, but Florida's Agency for Health Care Administration didn't take action until a phone call with the company on Sept. 5, 2024.
The initial draft of the settlement made no mention of the Hope Florida Foundation. Agency officials prepared to brief the governor's office on the settlement on Sept. 10.
Whether the meeting happened, or who attended, is not reflected in the records. But the next day, the Agency for Health Care Administration's general counsel sent a version to Secretary Jason Weida that required Centene to give $5 million of its settlement to the Hope Florida Foundation.
More changes followed. A draft sent to Guard on Sept. 12 removed all references to the state's Office of Inspector General.
Guard pushed back. The agreement required the attorney general, instead of the Agency for Health Care Administration, to handle the remaining $62 million. Guard also questioned how much would have to be paid to the federal government, which oversees and mostly funds Medicaid.
The agreement 'is different than I have seen in a settlement with Medicaid monies,' Guard wrote.
He did not question the diversion of $5 million to the Hope Florida Foundation.
The Agency for Health Care Administration's general counsel agreed with Guard and changed the settlement to make the agency receive and distribute the money on behalf of the state. He also increased the donation to the foundation to $10 million before sending another round of changes to Centene.
The records do not show why the donation to Hope Florida Foundation was added to the drafts, or why it was doubled. The Agency for Health Care Administration did not answer questions asked by the Herald/Times.
Centene's general counsel responded six days later with more changes apparently designed to protect the company.
Money from Medicaid-related legal settlements belongs to state and federal taxpayers, and diverting it to charities or political committees could amount to theft of federal funds or other crimes, four former federal prosecutors told the Herald/Times in May.
Centene held a phone call with the state's lawyers to discuss the changes on Sept. 20. The company's version of the settlement stated that the 'Attorney General directs' the company to donate the $10 million and that Centene wasn't responsible for how the money would be allocated.
Centene lawyers also wanted to mention that the Office of Inspector General was one of the state entities authorizing the settlement. It's not clear why, as the office isn't typically a party to legal settlements. Centene resolved similar overbilling claims with at least 20 states, and only one other settlement that is publicly available mentions inspectors general, according to a Herald/Times review.
'We would like FL OIG to continue to be explicitly listed,' one of their attorneys wrote.
When the Attorney General's Office received the newest draft, Guard balked. On Sept. 24, he deleted seven references to the Attorney General's Office and clarified that the Agency for Health Care Administration, not the attorney general, was directing the company to make the donation.
'I get that they [Centene] negotiated this in every other state with the AG,' Guard wrote to the agency's general counsel. 'But, they are negotiating this agreement with AHCA [Agency for Health Care Administration] and it is going to have to look slightly different.'
After the health agency's attorney made most of the changes, Guard still seemed less than enthusiastic.
He wrote that he didn't really want to represent the state in the legal settlement, 'but I am fine with this.'
The assurances from the attorney general's office — the state's top law enforcement entity — seemed crucial to Centene's lawyers, however. On Sept. 27, they sent a draft that added back nine references to the office. Each reference clarified that both the Agency for Health Care Administration and the attorney general were directing Centene's payments.
'I think we are down to one real issue,' wrote Centene's general counsel, Chris Koster, the former attorney general for Missouri.
'I agree that we are down to one issue,' the agency's general counsel, Andrew Sheeran, responded.
The two held a phone call later that afternoon, and Centene backed down. The final version, signed later that day, did not include the additional references to the attorney general or the inspector general.
Centene declined to answer questions and pointed to its past statements on this issue.
'The terms in the settlement document speak for themselves,' the company said. 'Centene had no part in or knowledge of any decision by the Hope Florida Foundation regarding the subsequent use of any Foundation funds.'
'Red flags'
DeSantis' administration kept the settlement secret until April this year, when Republican lawmakers and the Herald/Times obtained copies of the Hope Florida Foundation's Oct. 14 meeting minutes.
The minutes showed the foundation received $10 million as a result of 'a longstanding dispute with the Agency for Health Care Administration.' Herald/Times reporting previously revealed that for years, the charity didn't keep meeting minutes, had no budget or bylaws and didn't file its tax returns. And the money did not stay with the foundation , a state-created charity designed to support the state's Hope Florida program to move people off government assistance.
Within days, it was routed to two political nonprofits, which gave nearly all of it to a political committee controlled by Uthmeier that was dedicated to defeating the marijuana amendment. The leader of one of the nonprofits said Uthmeier called her to request the money from the foundation, according to a Republican lawmaker who investigated the matter. The nonprofit director later said that Uthmeier 'had limited involvement' and never told her what to do with the money.
DeSantis has defended the settlement, saying that Centene's donation was a 'cherry on top' of what the company owed. Uthmeier, who was appointed attorney general by DeSantis this year, said he had nothing to do with the final settlement talks. He was involved in meetings with Centene in 2021, records show.
Neither has disputed that the $10 million was used for political purposes.
Uthmeier's office hadn't released any records about the transactions until last week, when it gave hundreds of pages to Politico Florida 'exclusive for the next two weeks,' according to copies of text messages between a reporter and Rep. Alex Andrade, the Republican representative who probed Hope Florida. The messages were obtained by the Herald/Times.
Uthmeier's spokesperson, Jeremy Redfern, emphasized two things about the records, according to the texts from the reporter to Andrade: That they showed Guard was initially concerned about the legality of the settlement but eventually 'got it,' and that the money sent to the state in the settlement 'was more than three times the size of the state's actual financial loss.'
The Attorney General's Office last week released 390 pages of documents – many of which were requested in April – after the Herald/Times threatened to sue. Reporters also obtained hundreds of pages of emails and draft settlements from sources.
Redfern did not answer questions about the settlement or why the state first gave the records to Politico.
He also said Uthmeier 'never participated in any settlement negotiations and doesn't know anything about' the scheduled September 10 meeting last year regarding the draft agreement.
'Your questions demonstrate that you are deliberately misreading the public records our office provided you on a very expedited basis,' Redfern wrote in an email.
Medicaid statutes allow states to recover as much as three times damages. Centene's records show that other states received settlements based on the same formula. Part of that formula also included a baseline of $10.8 million to encourage states to settle with the company and not litigate their claims.
Regardless, that doesn't mean the money can be divided for purposes that aren't related to Medicaid, Andrade said, pointing to 2008 federal guidance.
'It looks very much like red flags were raised by the attorney general's office and by Centene,' Andrade said after reviewing the records himself. 'They were at the 10-yard line. And while they had some heartburn about it, it wasn't sufficient to blow the whole thing up.'
He added: 'The CYAs [Cover Your Asses] were evident.'
Andrade said it was also clear the state understood the money transferred to the foundation belonged to Medicaid, which would restrict how it could be spent. When the agency's lawyers inserted the donation into the agreement, they also justified it by referencing how the Hope Florida program was expanding into Medicaid.
The justification that remained in the final agreement was crafted by one of Centene's lawyers: the state Agency for Health Care Administration 'desires an expanded role for Hope Florida in the Medicaid program.'
'That says it all,' Andrade said.