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Regulators Halt WellCare Expansion

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CAROL GENTRY

Published: October 29, 2007

TAMPA - Florida's health regulators, citing the ongoing investigation of WellCare Health Plans by state and federal agents, on Monday night slammed the brakes on the company's expansion in Florida and announced it will review its own contracting policies.

Also on Monday, WellCare's stock continued its slide, ending the day at $28.62, down $2.74 from Friday's close and more than 70 percent below its pinnacle before the raid. A second class-action suit by investors was announced in the wake of Friday night's news the Securities and Exchange Commission had requested documents.

The insurer receives more than $4 billion a year from state and federal agencies to cover 2.3 million Medicaid and Medicare beneficiaries in its drug or HMO plans.

Chairman and CEO Todd Farha reassured employees and investors Monday that the company has more than $1 billion in cash and liquid investments and will ride out the storm. "We are cooperating with officials and intend to continue to do so," he said.

In Monday night's release from the Agency for Health Care Administration, Secretary Andrew Agwunobi called WellCare "a partner in Florida's Medicaid program" but said AHCA had to take "precautionary measures" in light of what happened Wednesday.

That morning, the company's Tampa headquarters was the site of a coordinated strike by about 200 agents of the FBI and health-fraud investigators from the state Attorney General's Office and the U.S. Department of Health and Human Services. Executing a search warrant, they confiscated communications equipment and questioned executives and members of the board of directors, who were meeting at the time. All were allowed to leave, and no arrests were made.

Neither the company nor any of the agencies involved has been willing to discuss what the agents were seeking. That information, presented to a federal judge, is contained in a warrant that remains sealed.

In Monday's release, AHCA announced it was:

Delaying requests from WellCare and its affiliated companies to expand into new service areas in the state. No details of the expansion request were provided.

Asking beneficiaries and health-care providers to call a hotline if they have concerns about any Medicaid managed health care plan. That number is (888) 419-3456.

Requesting the agency's Inspector General and Medicaid director review AHCA's managed-care contracting policies to identify weaknesses and suggest ways to strengthen them.

Working with other state agencies _ such as the Florida Office of Insurance Regulation and the Florida Healthy Kids Corporation _ to ensure a coordinated approach to monitoring the services provided by insurers.

"I am confident that we have the proper policies in place to ensure that Medicaid beneficiaries will continue to receive the highest level of service," said Dr. Agwunobi. "We will continue to evaluate the situation and respond as necessary."

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