KanCare company counters lawsuit accusing it of unethical behavior

An incendiary lawsuit over the business practices of one of the companies running KanCare, the Brownback administration’s privatization of Kansas’ $3 billion Medicaid program, just got more explosive.

The company, Sunflower State Health Plan, responded this week to a lawsuit accusing it of unethical behavior, saying the plaintiff, “an executive who was fired,” was trying to extort it.

In a counterclaim filed in federal court in Kansas City, Kan., Sunflower and its parent company, Centene Corp., alleges the former executive demanded $3 million from the company in return for not reporting it to the Kansas attorney general’s Medicaid fraud unit.

Calling her allegations “spurious,” Sunflower said it “refused to be extorted” and instead provided copies of her allegations and demand to the director of Kansas Medicaid Services, the director of the Kansas Division of Health Care Finance, the Kansas attorney general’s and U.S. attorney’s offices, and the FBI.

The counterclaim seeks unspecified damages from the former employee, Jacqueline Leary, for abuse of process and defamation.

Responding to Sunflower’s allegations, Leary’s attorney, Lewis Galloway, called the company’s counterclaim “paper thin” and its extortion allegation “the most ludicrous thing ever.”

“I have a very serious and specific concern about lawyers behaving this way,” Galloway said in a telephone interview. “If they truly believe that I am, in my practice, engaging in some type of extortion, they have a professional and ethical responsibility to make that known to the bar. Now they didn’t do that.”

Sunflower’s attorneys did not return calls seeking comment.

Sunflower’s counterclaim came in response to Leary’s accusation that Sunflower and Centene, based in Clayton, Mo., ordered employees to shift KanCare members away from high-cost providers as a cost-saving measure. Centene filed a similar counterclaim against Leary on Monday.

Leary, a former vice president of network development and contracting at Sunflower, contends she was fired after she objected to the directive, saying it was unethical and possibly illegal.

KanCare, which put private companies in charge of managing the state’s Medicaid program, was launched by Gov. Sam Brownback in January 2013. The program moved nearly all state Medicaid enrollees into health plans run by Sunflower and two other managed care organizations, Amerigroup and UnitedHealthcare.

Leary sued in October, shortly after it was reported that the three companies running KanCare collectively lost $76.2 million in 2014 after incurring losses of $110 million in 2013.

Leary claimed that Sunflower officials ordered her to steer Sunflower members away from providers that had contracted to be reimbursed at rates higher than 100 percent of standard Kansas Medicaid rates.

The company insists she was fired for poor job performance. In its counterclaim, Sunflower says Leary failed to resolve unspecified medical provider issues, chose to go shopping instead of helping prepare for a midyear review and “consistently exhibited a lack of professionalism, organization and responsiveness in her job position.”

It says Centene ordered its own independent investigation of Sunflower, which concluded “there was no wrongdoing.”

It also notes that the Occupational Safety and Health Administration had ruled against Leary, finding credible evidence she was fired for poor performance and not in retaliation.

This story was originally published January 1, 2015 at 7:06 PM with the headline "KanCare company counters lawsuit accusing it of unethical behavior."