Make us your home page

WellCare revises earnings down $28-million

Acknowledging "certain control deficiencies" among its former senior managers, WellCare Health Plans Inc. of Tampa is revising its financial statements from 2004 through mid 2007 to reflect accounting errors over refunds owed to Medicaid plans in Florida and Illinois.

The changes announced late Monday mean WellCare overstated its net income a total of $28-million in that time span. The company has not filed audited financial statements since mid 2007.

WellCare, which was raided by the FBI in late October, said a special internal committee found that the managed-care company had made "accounting errors" in its compliance with requirements for Florida Medicaid and Healthy Kids programs, as well as its contract with Illinois Medicaid.

Each state program pays WellCare a fixed amount per member, with the requirement that a minimum percent of premiums be spent on medical and mental health benefits. If less was spent, a refund would be due to the state. Regarding the Florida plans, the internal committee found that "we included certain ineligible medical expenses in our premium refund calculations which understated the amount of the refunds." The company said it also found an accounting error in how it handled its Illinois Medicaid contract. As a result, WellCare said it owes an additional refund of $46.5-million to the two state programs through the first half of 2007.

In WellCare's filing with the Securities and Exchange Commission, the company also said it found "material weaknesses" in internal control over financial reporting.

"Specifically, we have determined that former senior management set an inappropriate tone in connection with the company's efforts to comply with the regulatory requirements" of Florida's contracts, the filing said. Two months after the federal investigation became public, WellCare ousted its top three executives: Todd Farha, chairman, chief executive and president, as well as Paul Behrens, chief financial officer, and Thaddeus Bereday, general counsel.

The company has since appointed new leadership and formed a regulatory compliance committee consisting of only independent directors. WellCare also has separated the posts of general counsel and chief compliance officer. The duties of chief financial and chief accounting officer also have been segregated.

WellCare said it continues to cooperate with the ongoing federal investigation but cannot estimate the impact or size of any fines it might incur. The company also faces a number of shareholder lawsuits, as well as a whistle-blower claim from a former employee.

Its shares, which had been trading at more than $120 a share in mid October, closed Monday at $29.23, down $2.33. The restatement came after the market closed.

WellCare revises earnings down $28-million 07/21/08 [Last modified: Wednesday, July 23, 2008 10:11am]
Photo reprints | Article reprints

© 2017 Tampa Bay Times


Join the discussion: Click to view comments, add yours

  1. Tampa is 15th-most popular city to move to with U-Haul


    TAMPA —Tampa is undoubtedly a destination point, at least according to U-Haul.

    Tampa is the No. 15 destination for people moving with U-Haul trucks. | Times file photo
  2. Florida's economy growing faster than other big states and far better than U.S. overall


    When it comes to economic growth, Florida's running alongside the leading states and well ahead of the United States as a whole.

  3. Westshore Marina District project takes shape with another acquisition

    Real Estate

    TAMPA — One of Tampa Bay's prime waterfront areas took another major step toward redevelopment Friday as WCI Communities bought 2.35 acres in Westshore Marina District.

    WCI Communities, Lennar's high-end subsidiary,has paid $2.5 million for 2.35 acres in the Westshore Marina District for 35 townhomes. WCI is under contract  to buy an additional 9.5 acres.
[BTI Partners]
  4. Posh Guy Harvey RV park to open in Tampa Bay with $250,000 cottages


    HOLIDAY — Love those Guy Harvey T-shirts with the soaring marlins? In the not too distant future, you might be able to kick back in your own Guy Harvey cottage in the first-ever Guy Harvey RV park.

    Renderings of the clubhouse and an RV cottage site of the planned Guy Harvey Outpost Club & Resort Tarpon Springs.
[Guy Harvey Outpost Collection]
  5. Port Tampa Bay secures $9 million grant to deepen Big Bend Channel


    Port Tampa Bay has secured a $9 million grant from the U.S. Army Corps of Engineers for the widening and deepening of the Big Bend Channel in southern Hillsborough County.