TBO.com - TBO is Tampa Bay Online

WellCare Health Plans Admits Accounting Errors

ADVERTISEMENT

By JEROME R.  STOCKFISCH | The Tampa Tribune

Published: July 21, 2008

TAMPA - WellCare Health Plans said Monday it will restate more than three years' worth of financial reports because of accounting errors relating to government contracts with Florida and Illinois.

The Tampa-based administrator of Medicare and Medicaid programs said financial statements for the fiscal years ending Dec. 31, 2004, 2005 and 2006 would be restated, along with quarterly reports from the first two quarters of 2007. WellCare has not released financial reports since then.

In October 2007, the company's Henderson Road headquarters was raided by federal agents. The U.S. Attorney's Office has not commented on why WellCare was targeted. The company has replaced all of its top corporate officers and formed a special investigative committee.

In Monday's filing, WellCare acknowledged that it had understated the amount of refunds it owed the state governments to the tune of $42 million as of Dec. 31, 2006. The company said it also understated liabilities for the first six months of 2007 by $7 million.

WellCare receives premiums from states to provide medical and health benefits. The company is required to spend a minimum percentage of the premiums on care; when it spends less, it is required to refund all or some portion back to states.

WellCare told the SEC that it identified errors in compliance with a behavioral health component of a contract with Florida's Agency for Health Care Administration serving Medicaid members, and the "Healthy Kids" program, which provides benefits for Florida children whose family income makes them ineligible for Medicaid. An Illinois contract was also improperly accounted for.

In a press release, the company said financial statements for 2004-07 "should no longer be relied upon."

WellCare told the SEC its net income would be adjusted downward by $7 million, or 14 percent, from $49 million to $42 million for 2004. Net income would be revised downward by $5 million, or 9 percent, from $52 million to $47 million for 2005. The profit figure would be reduced $12 million, or 9 percent, from $139 million to $127 million for 2006. And the number would fall $4 million, or 5 percent, from $80 million to $76 million for the first six months of 2007.

In its filing with the SEC, known as an 8-K when a company reports material news, WellCare acknowledged that "certain control deficiencies" existed.

"Specifically, we have determined that former senior management set an inappropriate tone in connection with the company's efforts to comply with the regulatory requirements related to the AHCA contract and Healthy Kids," the 8-K stated.

WellCare shares plunged from over $122 to just over $22 in the week after the Oct. 24, 2007 raid on the headquarters complex. The shares closed Monday at $29.23, down $2.33.

Reporter Jerome R. Stockfisch can be reached at (813) 259-8402 or jstockfisch@tampatrib.com.

Share this:

Loading Comments...

Email Print

ADVERTISEMENT