WellCare's stock back on the rise
Subpoenas suggest an investigation could be limited to its Florida Medicaid business.
By KRIS HUNDLEY, Times Staff Writer
Published January 4, 2008
TAMPA - Shares of WellCare Health Plans Inc. rose nearly 10 percent Thursday after newly released subpoenas suggested the scope of an ongoing federal investigation is limited to its Florida Medicaid business.
More than 200 federal and state officials executed a search warrant at WellCare's Henderson Road headquarters on Oct. 24. Though government and company officials have declined to comment on the investigation, it is believed to be related to a whistle-blower lawsuit filed by a former executive with WellCare's special investigations unit.
Soon after the raid, the U.S. Attorney's Office in Tampa issued subpoenas to WellCare and four related companies, ordering them to produce hundreds of additional documents by the day before Thanksgiving. Among the records subpoenaed by federal prosecutors were:
- Reports on alleged violations of WellCare's corporate compliance program.
-Records of contracts and communication with WellCare's reinsurance subsidiary in the Cayman Islands.
- Contracts with providers and claim data of members of WellCare's Florida Medicaid plans, including behavioral health services.
- WellCare's bid for Medicare plans in Florida.
- Personnel files and compensation records for nearly four dozen WellCare executives, including its top officials.
In a note to investors Thursday, CIBC World Markets analyst Carl McDonald said the subpoenas do not indicate widespread fraud. He believes WellCare, which has 2.3-million members, will ultimately pay a fine to settle the government's claims, but remain in business.
McDonald targeted WellCare's stock price at $60 a share. It plunged to about $20 after the government raid from a high of about $128. Thursday, WellCare's shares closed at $46.16, up $4.17.