March 24, 2016 22:41 ET

WellCare Legal Case -- John Lauro Discusses Over-Criminalization of United States v. Clay on Legal Podcast

WASHINGTON, DC--(Marketwired - March 24, 2016) -  The Federalist Society's Criminal Law & Procedure Practice Group has presented a popular Teleforum podcast titled, Criminalizing Reasonable Interpretations of Regulatory Schemes: US. v. Clay. The podcast Moderator, John G. Malcolm of the Heritage Foundation, highlighted the risk of over-criminalization from legislation that gives broad discretion to regulators to enforce vague laws, or as he described it, "Fuzzy Legislation." John Lauro, Principal at The Lauro Law Firm, outlined one such example of over-criminalization and the key legal issues involved in the pending federal criminal appeal of United States v. Clay. In the discussion, Lauro cites the case as a prime example of over-criminalizing regulatory disputes regarding Medicaid payments to the healthcare company, WellCare. He has encouraged regulated businesses and their counsel to pay special attention to the case and its implications as the appeals court considers the case. To access The Federalist Society podcast, visit:

Lauro argues that the difference of opinion over the interpretation of a Florida Medicaid contract should never have been a prosecution of WellCare or its officers, but at most was a civil contract dispute. The problem, he described to a nationwide audience of Federalist Society lawyers, is that the lack of clarifying Florida statutes or regulations allowed federal prosecutors to turn a contract dispute into a federal criminal case. The quality of care was high, "There were no concerns about patient care or an instance where the company was not performing adequately under its contract by law," he explained. Lauro also discussed Florida's so-called '80/20 Statute' that required WellCare to reimburse Florida Medicaid in the event that less than 80% of premium dollars were expended for the provision of certain behavioral health care services. "There was no 80/20 regulation, there was a contract between the state and WellCare that reiterated the 80/20 requirement, but in doing the calculation, WellCare adopted what it believed was a reasonable formula in responding to the 80/20 calculation."

"This case does not involve instances of false doctors, or false claims, or non-existing patients," explained Lauro, during the live podcast, later archived on the Federalist Society's website. "In fact, all the testimony was clear that WellCare performed in an extraordinary way and exceeded obligations and expectations with the state. So how did this become a criminal case?" The expert in white collar criminal cases described how Florida Medicaid Agency specifically declined to enact clarifying regulations as it was required to do under state law: "There was nothing in the statute or the contract that prohibited the [medical economic] methodology [used by WellCare], and there was no regulation that said it was unacceptable."

When discussing the legal issues involved in the appeal, John Lauro placed special emphasis on the concepts of actus reus and mens rea, whereby persons should not be criminally prosecuted unless there is a crime (actus reus) and there is criminal intent (mens rea). Incredibly, "federal prosecutors brought a criminal case when the state itself declined to regulate." He highlighted the precedent of Whiteside v. United States, and said, "Whiteside provides and holds, that if a person is reasonably responsive to a regulatory framework, then that person cannot be prosecuted criminally, because there's an absence of actus reus". Lauro specifically addressed the injustice of prosecuting the CEO of WellCare, Todd Farha, "Farha, is making a compelling mens rea argument too, since he relied on advice of counsel there is [no crime] as well. It seems the case shows the government would lose if this were a civil case, and all the more so in a criminal context" where due process and the rule of lenity are applicable.

The Federalist Society's podcast was first broadcast in July 2015 and has since gained significant attention addressing over-criminalization of regulatory disputes and the federal criminalization of reasonable disagreements over the interpretation of legal requirements. The Federalist Society of Law and Public Policy Studies is a well-respected organization based in Washington, D.C. and dedicated to advancing the principles of individual liberty, traditional values, and the rule of law. Recently, many other national policy organizations and federal and state legislatures have been bringing more attention to the problem of over-criminalization and to protect citizens from unjust prosecutions, fines, and imprisonment. For further articles, videos, and podcasts about the WellCare Clay v. United States case, visit:

For more information about the WellCare Criminal Prosecution Case, visit:

Criminalizing Reasonable Interpretations of Regulatory Schemes: Clay v. United States -- Podcast:

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