Accounting & Tax

Regulators Probe WebMD

Investigators are focusing on financial reports involving a predecessor company, according to the provider of online medical information.
Stephen TaubFebruary 11, 2004

The Securities and Exchange Commission has joined the U.S. Attorney for the District of South Carolina in investigating WebMD, according to the company. The probe stems mainly from the company’s financial reporting for Medical Manager Corp., a predecessor of WebMD, and its Medical Manager Health Systems subsidiary, WebMD officials believe.

In September, WebMD announced that a search warrant was issued in connection with a Department of Justice investigation. The DOJ probe concerned the dealer-acquisition program of the company’s physician-services segment, WebMD Medical Manager, and the company’s 1999 $5.5 million financial restatement. (Medical Manager Corp. merged with WebMD in September 2000.)

Company officials stated at the time that they believed the search warrant was based on misleading information from two terminated employees sued by WebMD for taking improper kickbacks. Shortly after that announcement, the company named Andrew C. Corbin as its new executive vice president and chief financial officer. Corbin succeeded Kirk G. Layman, who became interim chief financial officer in May 2003.

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The current probe is tied to the earlier investigation, according to Roger Holstein, CEO of the online provider of medical information. “The SEC’s involvement in these investigations is customary and we do not view their involvement as an expansion of the initial investigation in any way,” he said.

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