WellCare's deposed director, head of audit committee, raises accounting concerns
It's not like Tampa's WellCare Health Plans needs a new controversy over accounting practices. But here it is. A prominent director and head of the board’s audit committee at WellCare resigned earlier this week and raised questions about accounting practices at the Medicare and Medicaid company, the Wall Street Journal reported Friday.
Her 3-page resignation letter is a doozie and well worth the read. Click here to read it.
Director Regina Herzlinger, a Harvard Business School professor, said internal audits found WellCare overbilled the Illinois Medicaid program by $1 million in 2009 and potentially overcharged states for almost $500,000 worth of maternity care. She also said WellCare ran afoul of Georgia’s requirements that it account for each patient visit for which it paid providers, resulting in a $610,000 fine, according to the Journal.
Herzlinger said those problems, corrected in 2009 and 2010 after an internal audit, are signs of weak accounting practices. Herzlinger said she wanted to provide oversight as chair of the audit committee, but the board did not renominate her for re-election at this year’s annual shareholders meeting. Herzlinger said the board forced her out for asking questions about accounting problems and corporate-governance practices. WellCare, in response, told the Journal that the accounting errors in question were minor and it was a good corporate-governance practice to refresh the board with new directors. In May 2009, Here's the complete Wall Street Journal story
Herzlinger is the Nancy R. McPherson Professor of Business Administration at the Harvard Business School. She was the first woman to be tenured and chaired at Harvard Business School and the first to serve on a number of corporate boards -- thought that number dropped by one this week.
WellCare paid Florida $80 million to settle federal and state criminal probes into allegations that it had defrauded Florida benefits programs for low-income adults and children of $40 million by inflating what it spent on care. After 200 state and federal agents raided its Tampa headquarters in the fall of 2007 (see photo, right), WellCare fired its top three executives, restated more than three years of earnings to correct payment errors to the government and blamed accounting problems on the former executives. (Photo: Chris Zuppa of the St. Petersburg Times.)
-- Robert Trigaux, Times Business Columnist