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Incendiary Lawsuit Over KanCare Company’s Practices Dismissed

A federal whistleblower lawsuit alleging that one of the companies running KanCare ordered employees to shift KanCare members away from high-cost health care providers has been dismissed.

A one-sentence document filed Tuesday in federal court in Kansas City, Kansas, said that the plaintiff, Jacqueline Leary, and the defendants, Sunflower State Health Plan Inc., its parent company Centene Corp. and three other parties, had stipulated to the dismissal. Each party was to bear its own costs and attorneys’ fees.

Attorneys for the parties could not immediately be reached for comment.

It’s not clear if the lawsuit was settled out of court, but the dismissal ends a case that featured incendiary claims on both sides.

The lawsuit was filed last fall by former Sunflower executive Jacqueline Leary, who claimed she was fired after she objected to a Sunflower directive that she regarded as unethical and possibly illegal.

Sunflower is one of three managed care companies that administers Kansas’ $3 billion Medicaid program, known as KanCare. The program was launched by Gov. Sam Brownback in early 2013 and moved nearly all of the state’s Medicaid enrollees into health plans run by Sunflower and two other managed care organizations, Amerigroup and UnitedHealthcare.

Leary, a former executive of Sunflower before her termination in January 2014, contended that Sunflower, motivated by financial losses, ordered her to steer enrollees away from providers that had contracted to be reimbursed at rates higher than 100 percent of standard Kansas Medicaid rates.

Sunflower and Centene fired back with their own accusations that Leary was fired for poor job performance and was trying to extort the companies. They alleged that she demanded a $3 million payment in return for not reporting them to the Kansas attorney general’s Medicaid fraud unit – a charge that Leary’s attorney later called “the most ludicrous thing ever.”

In March, U.S. District Judge John Lungstrum threw out Sunflower’s and Centene’s abuse-of-process claim. He ruled that even if Leary’s lawsuit was filed to extort or harass the defendants, the mere filing of a lawsuit, even for an improper purpose, was not a proper basis for an abuse-of-process action.

Lungstrum, however, let the companies’ addition defamation claim against Leary proceed.

Dan Margolies, editor of the Heartland Health Monitor team, is based at KCUR.

Dan Margolies has been a reporter for the Kansas City Business Journal, The Kansas City Star, and KCUR Public Radio. He retired as a reporter in December 2022 after a 37-year journalism career.
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