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WellCare Raid Reaps CEO's Notes

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By RICHARD MULLINS, The Tampa Tribune

Published: November 17, 2007

TAMPA - Federal and state agents had a wide focus in their raid of WellCare Health Plans, seeking evidence of "monetary overpayments" received by the Tampa company from government-sponsored health programs, according to federal court records released Friday.

Using a search warrant that sought 26 kinds of items from the past five years, the agents also pursued information related to WellCare's "behavioral health services" in documents seized from dozens of employees, including papers off the desks of top executives.

Agents described finding one "letter to get around Medicaid requirements."

In the Oct. 24 raid, about 200 agents from the FBI and other federal and state agencies searched for information ranging from WellCare's internal audit committee to items related to the Louis de la Parte Florida Mental Health Institute at the University of South Florida.

No arrests have been made, and though officials declined to comment on the warrant or the documents retrieved, the information released by the federal court in Tampa on Friday does provide the first public indication of what types of information government investigators are examining.

WellCare, which receives about $4 billion a year in federal and state money, still has "no indication what the government is investigating," said Greg W. Kehoe, an attorney for WellCare with the Tampa law firm of Greenberg Traurig.

"The only thing we've done is tell the government we will cooperate at any point, at any time and in every way possible," Kehoe said.

Details released Friday are described in a nine-page search warrant authorizing the raid on four WellCare buildings, plus a 43-page index listing items agents retrieved. It begins to shed light on an investigation that has devastated the company's stock, lopping off more than 80 percent of its value in a matter of days, a dramatic and sudden reversal for a darling of Wall Street.

The company had grown rapidly in the niche market of administering health plans for governments and is the largest Medicaid contractor in Florida. WellCare has 2.3 million members in its drug and HMO-style plans - all of them Medicare and Medicaid beneficiaries.

WellCare shares closed Friday at $34.20, up 45 cents for the day. The stock had traded above $120 a share just before the raid and had fallen to about $20, although it has since regained some ground after a favorable earnings report Nov. 5 and analysts' forecasts that it will suffer little damage from the fraud investigation.

The information released Friday showed that agents retrieved documents referencing activities in at least nine states, including Florida, New York, Illinois, Georgia and Ohio, plus at least one health program at USF.

That collection included copies of the chief executive's computer hard drive and papers from the chief financial officer titled "2007 Stairway to Heaven Plan."

The index of documents and items brought back from the search does not necessarily indicate the specific interests of investigators. Rather, it lists any item that any of the 200-plus agents retrieved during the search. Commonly, agents conducting search warrants will seize a wide range of items, then bring those items into custody for analysis or return to the company or person being investigated.

In this case, the index lists:

•Handwritten notes and charts taken off the office walls of CEO Todd S. Farha, plus papers from his desk about executive compensation, stock vesting analyses and equity for vice presidents and directors.

•Papers from the office of Chief Financial Officer Paul L. Behrens, including audit documents related to the accounting firm Deloitte and a document described as "Analysis of shorting stock."

•A copy of a $20,000 check to "Puerto Rico patron saint festival."

Agents also made copies of top executives' computer hard drives, and they took computer disks and portable memory drives.

Aside from government action, the raid itself has had an effect on WellCare. Several investors filed suit in Tampa accusing company officers and directors of falsely inflating financial results to promote a run-up in the stock price, and then cashing in on their stock options to become millionaires.

Also, attorneys general of several states announced they had investigations into WellCare's business practices.

Reporter Richard Mullins can be reached at (813) 259-7919 or rmullins@tampatrib.com.

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