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WellCare settles lawsuit for $200 million, posts second-quarter loss

TAMPA — WellCare Health Plans reported a second-quarter loss Monday, resulting largely from charges to settle separate lawsuits by investors and the federal government.

The Tampa company posted a quarterly loss of $128.9 million, or $3.05 per share. A year earlier, the company posted a quarterly profit of $37 million, or 88 cents per share.

The Medicaid and Medicare managed-care company disclosed Monday a settlement to pay $200 million to shareholders in a class-action suit. They sued for lost stock value after the FBI and the Florida attorney general's Medicaid fraud unit raided WellCare's Tampa headquarters in October 2007.

In June, WellCare agreed to pay $137.5 million to the U.S. Justice Department and other federal agencies to settle lawsuits accusing the company of overcharging for its Medicaid and Medicare programs.

The deal, which would resolve a nearly three-year federal investigation, could get derailed. An attorney for a whistle-blower who sued WellCare pledged to challenge the settlement. Tampa attorney Barry Cohen says the deal underestimates the value of fraud.

During the second quarter, WellCare reserved $194 million for the shareholder settlement. For the federal lawsuit, WellCare reserved $55 million during the second quarter. The balance of the suit settlement had been reserved earlier.

"We believe we will be able to meet our known near-term monetary obligations, including the terms of this (shareholder) settlement agreement, and maintain sufficient liquidity to operate our business," said Tom Tran, WellCare's chief financial officer, in a statement.

The company also announced a restructuring that will affect fewer than 100 jobs. A spokeswoman last week put the number at 87 nationwide but couldn't say how many layoffs were in the Tampa Bay area. WellCare employs about 3,500 people, with 2,300 in Tampa.

Steve Huettel can be reached at [email protected] or (813) 226-3384.

WellCare settles lawsuit for $200 million, posts second-quarter loss 08/09/10 [Last modified: Monday, August 9, 2010 7:22pm]
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