(Updated with more details of the agreement and comments from
government investigators.)
DOW JONES NEWSWIRES
Wellcare Health Plans Inc. (WCG) will pay $80 million as part of
a deferred-prosecution agreement with state and federal officials
to resolve allegations it tried to defraud Florida's Medicaid and
Health Kids programs.
Shares jumped 16% to $18.17. The stock is up 41% this year, but
remains far below the $128 level shares were at in October 2007 as
agents of the Federal Bureau of Investigation, the Department of
Health and Human Services and the Florida attorney general's
Medicaid fraud unit raided WellCare's headquarters in Tampa.
The investigation centered at least in part on allegations
WellCare inflated the amount it spent on mental-health care in
order to keep money it should have refunded to Florida's Medicaid
program.
"In this case, corporate greed was responsible for the theft of
funds from critical government programs," said FBI Special Agent
Steven E. Ibison.
Company executives on Tuesday expressed pleasure with the deal,
saying WellCare cooperated fully with the probe and has enacted
various compliance efforts as a result.
"Compliance with all of the laws and regulations governing
WellCare's business is a top priority, not only for our senior
leadership team, but for all of our associates," said Charles G.
Berg, WellCare's executive chairman.
The agreement with Florida and federal officials calls for
WellCare to retain an independent monitor for 18 months. The
company will pay $80 million as part of the deal, $35.2 million of
which it paid last August. Another $25 million is due within one
week of the agreement's finalization, with the remaining $19.8
million to be paid by year's end.
As part of the agreement, WellCare must accept and acknowledge
full responsibility for the conduct that led to the government's
investigation. Prosecutors said they are still investigating
individual WellCare executives and employees who allegedly
participated in the fraud.
"The investigation of these individuals will continue until all
those criminally responsible have been brought to justice," Ibison
said.
-By Kevin Kingsbury, Dow Jones Newswires; 201-938-2136;
kevin.kingsbury@dowjones.com
