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SEC joins WellCare inquiry

The health care company is already under scrutiny as the agency asks for documents.

By KRIS HUNDLEY, Times Staff Writer
Published October 27, 2007

The U.S. Securities and Exchange Commission wants information from WellCare Health Plans Inc., a Tampa managed-care company already under federal scrutiny.

In an release Friday evening, WellCare said the SEC, which regulates public companies, has asked for unspecified documents. The request came a day after a midweek raid by federal and state investigators at WellCare's Henderson Road campus.

The SEC inquiry was the latest in a series of blows for the company, which received nearly $4-billion last year from government sources to provide managed-care plans to people on Medicare and Medicaid. Among WellCare's woes:

- Its share price continued to fall, ending the week at $31.36, down more than 70 percent and erasing more than $3.5-billion of the company's market value since Wednesday's raid.

- The first in what is likely to be a rash of shareholder lawsuits was filed against WellCare in U.S. District in Tampa, claiming the company hid damaging information from investors.

- The head of Medicaid in Connecticut, where WellCare's health care plan for children has been highly criticized, demanded a copy of the search warrant that led to seizure of an undisclosed number of files.

WellCare responded by saying it has continued to provide uninterrupted service to its 2.3-million members. "We remain committed to cooperating with the government throughout this process," said Todd Farha, WellCare's chief executive.

The company has set up a special hotline for employees to express their concerns about the incident. A special committee of outside directors has also been named to monitor developments.

The committee includes Ruben King-Shaw, the former head of Florida's health care agency, as well as two investment fund managers, Neal Moszkowski and Chris Michalik.

WellCare shed no light on the nature of the government's investigation, which involved agents from the Federal Bureau of Investigation as well as Florida's Medicaid Fraud unit. WellCare said neither the company nor any of its officers or employees have been charged with any crime. The company also said it is financially sound, with more than $1-billion in cash and cash equivalents.

It has been a bad week for WellCare. Following the replacement of several computer servers last weekend, a fire broke out in the main server room on Monday morning, forcing workers to evacuate for a few hours.

A WellCare spokeswoman said Friday that Monday's fire was due to "isolated maintenance issues."

"No data was lost," said spokeswoman Amy Knapp.

Kris Hundley can be reached at hundley@sptimes.com or (727) 892-2996.

[Last modified October 26, 2007, 22:43:14]