TBO.com - TBO is Tampa Bay Online

Investors Continue WellCare Exodus

ADVERTISEMENT

The Tampa Tribune

Published: October 27, 2007

TAMPA - Shares in WellCare Health Plans Inc. tumbled farther Friday, falling more than 25 percent as investors continued to flee the stock in response to Wednesday's raid of company headquarters by federal and state agents.

Shares slid $11.31, or almost 27 percent, to $31.36 Friday. More than 30 million shares traded hands Friday - more than 25 times the daily average. On Thursday, shares plunged more than 60 percent.

Meanwhile, the Connecticut attorney general said his office has been investigating an affiliate of WellCare for months, adding to the legal problems faced by the U.S. health insurer. The state probe into WellCare of Connecticut Inc., however, is unrelated to the Florida investigation, Connecticut Attorney General Richard Blumenthal said.

He said his office is investigating transactions between WellCare and its affiliate companies - and the potential impact on the costs of the state's Medicaid program.

Blumenthal said his office's interest began after receiving a whistle-blower complaint and public reports by Wall Street analysts alleging that WellCare was hiding and misreporting profits earned through its Medicaid programs. Blumenthal said WellCare has been voluntarily cooperating with his investigation.

'We believe we have done nothing to misstate earnings or profits,' spokeswoman Amy Knapp said. 'We believe we did not violate any provision of Connecticut law.'

WellCare issued a prepared statement early Friday saying 'the primary focus of WellCare Health Plans, Inc. is to ensure that operations are running smoothly, provider claims are paid in a timely manner, customers' calls are answered and access to covered health care services for members is provided.

'We continue to respond to Wednesday's developments in a direct, prompt and orderly manner,' Todd S. Farha, chairman and chief executive officer said in the statement. 'We remain committed to cooperating with the government throughout this process.'

Committee Formed To Monitor Proceedings

WellCare said Friday that its board of directors formed a special committee to monitor developments of the investigations and to oversee the company's response to them.

The members of the special committee are: Neal Moszkowski, the co-chief executive officer of TowerBrook Capital Partners L.P. and the former chairman of WellCare; Chris Michalik, a managing director of Kinderhook Capital Partners and a member of the company's audit committee; and Ruben Jose King-Shaw, the chairman and chief executive officer of Mansa Equity Partners, Inc. and the former deputy administrator and chief operating officer of the Centers for Medicare & Medicaid Services and former secretary of the Florida Agency for Health Care Administration.

Law firms have started filing the first lawsuits against WellCare seeking class action status among shareholders of the company.

New York-based Roy Jacobs & Associates filed one lawsuit Friday in the United States District Court for the Middle District of Florida, alleging that the company 'manipulated WellCare's accounting for revenues and income,' among other claims. New Orleans-based Kahn Gauthier Swick also filed a lawsuit

Reasons For Raid Have Not Been Given

Neither the company nor the FBI and other authorities involved in Wednesday's raid have divulged the reason behind the action. More than 200 agents from the FBI, U.S. Department of Health and Human Services, and the Florida attorney general's Medicaid Fraud Control Unit searched the company's corporate campus on Henderson Road in Tampa on Wednesday.

Information from The Associated Press was used in this report.

Share this:

Loading Comments...

Email Print

ADVERTISEMENT