Response to Kansas Medicaid suit alleges extortion

A firm managing part of the Medicaid program in Kansas and its parent company alleged Monday in court documents that a former executive tried to “extort” $3 million from them by threatening to forward “spurious” information about them to state officials after being fired.

Sunflower State Health Plan Inc. and its parent, Centene Corp., made the claims in response to a federal lawsuit filed in late October by Jacqueline Leary, vice president of network development and contracting for Sunflower. She alleged in her lawsuit that she was wrongfully fired in January after protesting potentially improper cost-cutting measures for Medicaid in Kansas.

Leary’s attorney, Lewis Galloway of Kansas City, Mo., did not immediately return a phone message seeking comment.

The state’s $3 billion-a-year Medicaid program covers health services for 368,000 poor and disabled residents. Republican Gov. Sam Brownback turned over the program’s administration in 2012 to Kansas-based subsidiaries of three large, private health insurance companies, including Sunflower, which is based in the Kansas City suburb of Lenexa. Centene’s headquarters is in St. Louis.

Leary filed her lawsuit eight days before the November election, with Brownback in a tough re-election race that he won narrowly. The conservative governor contends the privatized Medicaid program, now called KanCare, is delivering better services at a lower cost to the state, but Democrats used the lawsuit to raise new questions about the program’s overhaul.

Centene and Sunflower denied Leary’s allegations in separate replies to her lawsuit, said she was fired for poor performance and accused her of defaming them in comments to health care providers after she lost her job. The companies also said that in February, three weeks after her firing, she sent a letter to them through her attorney, demanding $3 million within seven days.

The companies said in court documents that Leary threatened to file a “formal report” about them with the Kansas attorney general’s office and state officials overseeing Medicaid. The firms said Leary’s lawsuit was part of an “extortive scheme.”

Sunflower and Centene said they forwarded Leary’s demand to the FBI, federal prosecutors in Kansas and western Missouri, the Kansas attorney general’s office and state Department of Health and Environment officials overseeing Medicaid for potential investigations.

The offices of the federal prosecutors and state attorney general would not comment. FBI and Kansas health department representatives did not immediately return phone messages seeking comment. Neither did an attorney representing the two companies.

Leary’s lawsuit alleges she was fired after questioning a directive not to assign Medicaid participants to some physicians based on whether their institutions had contracts with Centene to be paid more than the standard rate for services. Her lawsuit describes the move as an attempt to lower costs when the KanCare management companies were experiencing losses, possibly violating Sunflower’s contracts with the state and individual providers.

But Centene and Sunflower said that when Leary lodged an internal protest, she “could not articulate reasons” why the practice was unethical and said she didn’t complain about it until after receiving a poor job-performance evaluation.