Human Capital & Careers

Top Execs Quit Un-WellCare

The healthcare company is under investigation for cheating on refund payments to Florida's Medicaid program.
Stephen TaubJanuary 28, 2008

The CFO and two other top executives of WellCare Health Plans abruptly resigned Friday evening, three months after federal and state agencies conducted a search of the company’s Tampa headquarters.

WellCare, which provides managed-care services for Medicaid and Medicare plans, said it is cooperating with the U.S. Justice Department, the Florida Attorney General, and other agencies, and that it has received requests for information from the Securities and Exchange Commission.

The company added that it is responding to subpoenas issued by the Connecticut Attorney General involving transactions between WellCare and its affiliated companies and their potential impact on the costs of Connecticut’s Medicaid program.

CFO Paul Behrens, chairman and CEO Todd Farha, and general counsel Thaddeus Bereday each resigned but agreed to remain as non-executive employees through March 31 to assist in the transition to new management.

The company appointed Charles Berg as executive chairman and Heath Schiesser as CEO, effective immediately. Searches are under way for a new CFO and general counsel.

It quoted the U.S. Attorney as stating that the ongoing investigation “does not directly concern, nor should it have any impact upon, the delivery of any healthcare service to any person.”

In early November, The Wall Street Journal reported that the investigation partially centers on allegations that 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.

WellCare used different words that basically mean the same thing: It said it believes the investigation principally involves relationships between its Florida health plans and its behavioral health subsidiary, Harmony Behavioral Health, and the calculation of a behavioral health refund to Florida’s Medicaid agency. The company also said that it has not been advised of the full scope of the investigation.

The Journal also reported that investigators are looking at whether reinsurance arrangements with a Cayman Islands subsidiary allowed the company to misrepresent outlays for care.

WellCare has not filed its quarterly report for the September period and warned that it will not file its 2007 annual report on time.