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Sunday, May 20, 2018
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Federal agents at Universal Health Care in St. Pete

ST. PETERSBURG - Federal agents raided the offices of troubled insurer Universal Health Care Thursday morning as allegations surfaced that top executives transferred millions out of company accounts and paid themselves hefty bonuses while the company was becoming insolvent.
Tuesday, a U.S. bankruptcy court trustee accused company executives of a “pattern of dishonesty or gross mismanagement,” saying they had arranged for personally beneficial “side deals” and paid themselves multimillion-dollar bonuses.
The allegations come as hundreds of employees are set to lose their jobs today and the state is preparing to shut down Universal by Monday.
Universal paid company founder and president Dr. Akshay Desai a $2.5-million bonus last year, on top of his $900,000 salary, and gave other top executives $2.2 million in bonuses and other compensation, according to a motion filed by the trustee. Those payments came as the company was under scrutiny by regulators for having insufficient funds to pay out health care claims.
Executives transferred more than $18.3 million to another company controlled by Desai, American Managed Care, and another $2.9 million to an unnamed “shareholder,” the motion states.
About two dozen agents with the FBI and federal Department of Health and Human Services' Office of the Inspector General descended on Universal's downtown headquarters at 100 Central Ave. about 8 a.m. Thursday.
The Inspector General's office investigates health care fraud, but Ryan Lynch, the office's assistant special agent in charge, would not say why the federal agents were there, aside from saying they were executing a search warrant.
Within half an hour, hundreds of employees were milling around outside the building, barred from entering by the agents. The agents had a list of names of people they were looking to interview inside, employees said.
Some employees said the raid did not surprise them, especially after the state Department of Financial Services moved to place the company into receivership, citing massive financial problems, including allegations the company misled creditors.
Federal agents spent the day at the company's headquarters last Thursday, after a Leon County judge ruled that Universal be placed under state control.
Employees said they saw Desai at the office this week but that he did not speak to workers.
“In a sense, we don't want to see him, but we want an explanation,” said longtime employee Andrea Beacham.
Company officials could not be reached for comment Thursday and did not send out an official statement about the morning raid, as promised.
In a bankruptcy court filing Thursday, the company said its lawyer had spoken with the U.S. attorney in charge of the investigation and that it was “fully cooperating with the United States Attorney's Office in connection with the search warrant.”
The company began laying off employees late last year and dropped from 1,000 to 800 a couple of weeks ago. That number has continued to drop, as the company filed for bankruptcy last month and struggled to stay in business as state regulators sought to take over Universal and dissolve it.
Employees filed a class-action lawsuit Thursday against Universal, saying they had not had 60 days notice of their layoffs, as required by law. The suit, filed on behalf of more than 500 employees, says workers are seeking 60 days wages and benefits.
“How do you give people a week's notice and try to raise a family or pay bills or whatever you have to do?” said Beacham, who is not named in the suit.
Universal had scheduled a job fair Thursday morning with other area insurance companies, and federal agents allowed small groups of employees to re-enter the building to attend.
A skeleton crew of workers was allowed to stay at their desks and handle critical insurance claim calls.
Desai founded Universal in 2002 and, since then, it has grown from its base in St. Petersburg to provide Medicare Advantage health plans in 19 states and a Medicaid HMO in Florida. Its two Florida-based insurance companies provided coverage to about 140,000 people who are now scrambling to find health coverage elsewhere.
Universal's financial problems have been the subject of intense scrutiny by state and federal regulators in recent months.
The company filed for Chapter 11 bankruptcy in February, and a state investigation revealed Universal was deeply in debt, had exhibited a pattern of mismanagement with five CFOs in six years and could not continue supporting policyholders.
Several potential buyers stepped forward with plans to rehabilitate the company with capital investments, but a judge found the company was financially insolvent after numerous employees quit and health providers canceled contracts, complaining they hadn't been paid in recent weeks.
The most recent would-be buyer, Citrus Universal Healthcare, sought to purchase Universal's two Florida companies for $33.25 million but backed out of the deal after they were placed into state receivership.
Citrus still has a pending agreement to buy two Universal subsidiaries in Nevada and Texas for $15.2 million.
Some employees hoped to find work with those companies, which are not being affected by the state's liquidation of the Florida companies.
But many stood in line outside the office Thursday morning to get their photos taken by Kirsten Gates, who was offering professional headshots people could use on the LinkedIn professional networking website.
“Everyone's been walking around with their heads down,” she said. “People have families with children, and they're just devastated.”
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