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Sentara executives ordered to give more testimony in federal fraud investigation

Sentara Norfolk General. (Photo by Katherine Hafner)
Sentara Norfolk General. (Photo by Katherine Hafner)

This story was updated March 19, 2024 at 3:02 p.m.to reflect Sentara executives were called to testify again, which does not require more court appearances. The story was also updated to reflect Sentara became the only service provider in the Charlottesville area in 2017.

A federal judge ordered Sentara executives to give additional testimony in relation to an ongoing case in which the U.S. Department of Justice is investigating whether Sentara Health Plans — formerly Optima Health — unfairly increased premiums and pocketed an extra $665 million in 2018 and 2019.

According to recently unsealed court documents, Judge Elizabeth K. Dillon in Roanoke ordered former Optima CEO Michael Dudley and Optima chief actuary James Juillerat to provide sworn testimony in the case within 60 days of the ruling.

At the center of the government’s case is whether or not Optima Health and its parent company Sentara lied to federal insurance regulators when they submitted claims under the Affordable Care Act. When Anthem and Aetna pulled out of Virginia’s Affordable Care Act marketplace in 2017, Optima filled the gap and its premiums skyrocketed. Dudley and Juillerat worked in Hampton Roads at the time, setting premiums and reporting those rates to the government.

"In 2017, when policymakers in Washington destabilized health insurance markets, more than 350,000 Virginians were at risk of not having access to any insurance on the exchanges," Sentara spokesperson Michael Kafka wrote in an email to WHRO. "Sentara had a choice: follow the same path as some of the biggest insurers and exit, or work with state and federal officials to ensure residents of Charlottesville and other regions still had access to an ACA-eligible plan. At the urging of state and federal officials, Sentara formulated rates in just 26 days that normally take six months or more to develop. These rates were verified by a leading independent actuarial firm and approved twice by Virginia regulators."

Juillerat testified in December 2022 and Dudley in June 2023 but the government said Sentara withheld 8,000 pages of relevant documents until both men finished. Sentara told the court the documents were “duplicative” of files the company already provided.

According to the U.S. attorneys, the documents were new and relevant to the investigation. They asked for all files relevant to Sentara and Optima’s rate-setting and reporting practices.

“Had Sentara produced these responsive records in a timely fashion,” they wrote, “these topics could have been addressed with the witnesses at the initial testimony.”

Kafka told WHRO Sentara has provided more than 27,000 documents and seven former and current employees have given approximately 70 hours of interviews in relation to the investigation.

"This recent ruling on procedural matters will help clarify the process moving forward. As it has for nearly three years, Sentara will continue to operate in good faith and looks forward to a resolution of this matter," he wrote. Former Sentara CEO Howard Kern and the company’s board were allegedly involved in deciding insurance price rates as well, according to court documents and Dudley’s own testimony. Sentara agreed in October 2023 to produce Kern for testimony under certain conditions like a time and place of his choosing and for no more than 7 hours.

Sentara has fought to keep court proceedings secret since the beginning of the case — but Dillion’s latest ruling denied that request, at least in part.

“Sentara has not shown that its interests regarding sealing all requested documents wholly outweigh the public’s right of access,” Dillon wrote in her March 8 opinion.

Dillon did seal documents that discussed the government’s investigation and its witnesses.

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