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Letter to the editor

WellCare papers hint at inquiry

The search warrant was for evidence of overpayment.

By By KRIS HUNDLEY
Published November 20, 2007

WellCare Health Plans' directors were listening to a presentation about the managed care company's 2008 Medicare plans when federal agents burst into the boardroom in Tampa on the morning of Oct. 24.

By the end of the day, investigators had hauled away thousands of documents, copied dozens of computer hard drives and confiscated several laptops, including one belonging to WellCare's chief executive, Todd Farha. Also seized: the interrupted PowerPoint presentation on 2008 Medicare enrollment plans.

Nearly a month after the October raid, previously sealed documents released by the U.S. Attorney's Office in Tampa give a hint at what investigators were after and what they got.

The exact nature of the investigation remains unclear, although a former WellCare fraud investigator filed a sealed whistle-blower lawsuit in Tallahassee the day after the raid.

According to the search warrant, authorities were looking for evidence of "any monetary overpayments" received by WellCare. The company had nearly $4-billion in revenues last year, all from government sources.

Specific areas of interest to federal agents were documents dealing with Medicaid, the state of Florida and WellCare's mental health subsidiary, Harmony Behavorial Health.

WellCare provides Medicare and Medicaid managed care plans for 2.3-million members nationwide. About half its members are in Medicaid plans and Florida is its biggest Medicaid market.

A WellCare spokeswoman declined to discuss the documents seized, which were itemized by federal agents in a 43-page inventory.

"We will not comment on the contents of specific documents since many contain proprietary information," said WellCare's Amy Knapp. The company has previously said it is cooperating fully in the government's investigation.

Included in the documents - many of them with suggestive names - seized from dozens of executives' desks were:

- The chief financial officer's "2007 Stairway to Heaven" plan as well as a document entitled "Analysis of shorting stock."

- A copy of a check for a "Puerto Rico Saint festival."

- Handwritten notes about "shell companies."

- A memo called "cracking the WellCare DaVinci Code with Payment schedule."

- A document called "Jo-Jo phantom accounts analysis - Florida miscoding."

- And a letter to "get around Medicaid requirements" as well as one called "docs re: possible kickback."

WellCare's shares edged up slightly on Monday to close at $35.01, up 81 cents. The stock is still down more than 70 percent from its high of $128.42 before the search warrant was executed.

CIBC World Markets analyst Carl McDonald said the government investigation is likely to last another six to 12 months, but probably won't put WellCare out of business.

"The obvious question is whether the government would send in 200 agents in a raid in order to recover a relatively insignificant amount, or if they have their sights set on something more than that," he said. "We think the investigation will prove to be broader than this one issue, so there are likely more negative headlines to come as further details of the investigation are released."

Staff writer Kevin Graham and information from wire stories was used in this report. Kris Hundley can be reached at hundley@sptimes.com or (727) 892-2996.

[Last modified November 19, 2007, 22:54:21]