WellCare hints it owes more
3/17/2009 © Florida Health News
Without elaborating, WellCare Health Plans signaled on Monday that it may have to pay more than it had hoped to settle a fraud investigation that became public knowledge when the company's Tampa headquarters were raided by FBI agents in October 2007.
In its annual statement for 2008 filed Monday with the Securities and Exchange Commission, the company said "it is probable" that the amount needed to resolve the investigation "will be more than the amounts that have already been reflected in our financial statements."
WellCare recorded a liability of $50 million for 2007 in connection with the case and last August, it transmitted $35.2 million to the U.S. attorney's office, public documents show. Of that, $24.5 million was to be turned over to the agencies it defrauded -- mainly, the Agency for Health Care Administration, parent agency for Florida Medicaid -- and another $10.7 million was to be held in escrow.
In the most recent SEC filing, the company said it could not provide an estimate of the amount, timing or terms and conditions of the potential resolution of the case. The filing brought the company, which had had to restate its earnings statements for several years to make them accurate, up to date.
Charles G. Berg, WellCare’s executive chairman, celebrated that achievement in a release. “In addition, over the past year, we have made substantial progress in resolving our legal issues,” he said.
WellCare has had a complete change of management and a more-aggressive oversight role by independent board members since the end of 2007, but problems persist.
The most recent: Last month, as Florida Health News reported, federal Medicare authorities ordered the company to stop sales of its drug and health plans because of the high volume of complaints from customers who could not get their medications or treatments. It is unclear how long the stop-sale order will be in effect.
As for the fraud investigation,
Meanwhile, new managers and a board committee have not yet been able to resolve negotiations with the U.S. Attorney's Office in Tampa that would settle the civil suit filed against it by the Justice Department.
Company officials have made very few statements that would offer clues on what the hangup is in the negotiations with the U.S. Attorney, and justice officials have said nothing.
The company is now up to date in its filings for the first time since the raid; it has had to restate earnings following exhaustive audits.
In the SEC statement filed on Monday, WellCare reported a net loss of $36.8 million for the year 2008, which ended Dec. 31. Its adjusted net income was set at $133 million, far below the $216 million in 2007.
Even though premium revenue grew 22 percent, that was more than offset by increased spending on health benefits and losses in investments, the company said.
Health spending was about 82 percent of premiums, the company reported, compared to 77 percent under the previous management. 6 percent in 2007.
For the quarter that ended Dec. 31, Medicaid spending was reported at about 84 percent, compared to 76 percent for the same period the year before. Spending on Medicare patients was about 81 percent, compared to 78.5 percent the year before.
WellCare, Florida's largest Medicaid health-plan contractor, has concentrated exclusively on government programs. As of Dec. 31, it had 2.5 million members enrolled in drug and health plans across the nation.
--Questions? Contact Editor Carol Gentry at this e-mail or 727-410-3266.