The Wall Street Journal-20080124-WellCare Aims to Oust Three Top Officials
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WellCare Aims to Oust Three Top Officials
The board of WellCare Health Plans Inc. is negotiating the departure of the company's three top executives amid a probe into fraud allegations at the managed-care provider, according to people familiar with aspects of the proceedings.
The outcome of the talks could be announced as soon as today.
The discussions with Chairman and Chief Executive Todd Farha, Chief Financial Officer Paul Behrens and General Counsel Thaddeus Bereday come three months after more than 200 federal and state agents raided the company's Tampa, Fla., headquarters. WellCare runs Medicare and Medicaid managed-care plans covering 2.3 million people.
A WellCare spokeswoman declined to comment or make the executives available for comment. Attorneys for the executives didn't return calls. Officials at the U.S. attorney's office in Tampa and an attorney for WellCare's board also declined to comment.
The board initiated the talks to secure the executives' exit, but it has taken longer than expected to iron out the details, one of the people familiar with the proceedings said. Any departures "are not a part of any settlement discussions" with authorities, this person added. The person declined to say who might replace the executives.
WellCare's shares yesterday fell $1.46, or 2.8%, to $50.94 in 4 p.m. New York Stock Exchange composite trading. The stock is at less than half its $115.17 closing price Oct. 24, the day of the raid.
The Wall Street Journal reported in early November that the investigation centers at least in part on allegations the company inflated the amount it spent on mental-health care in order to keep money it should have refunded to Florida's Medicaid program. Among other questions, authorities are investigating whether reinsurance arrangements with a Cayman Islands subsidiary allowed the company to misrepresent outlays for care.
The company has said it is cooperating with the investigation, which has involved personnel from the Federal Bureau of Investigation, the U.S. attorney's office, the Department of Health and Human Services' Office of the Inspector General and the Medicaid Fraud Control Unit in Florida Attorney General Bill McCollum's office. The company also has received a subpoena from the Securities and Exchange Commission. Connecticut Attorney General Richard Blumenthal's office is investigating as well.
