WellCare probe involves expense reporting fraud: report
NEW YORK (Reuters) - The recent raid by federal and state officials on WellCare Health Plans Inc's (WCG.N) Florida headquarters involves allegations that the insurer committed Medicaid fraud, according to a report by the Wall Street Journal.
Citing a person familiar with details of the investigation, the report said the raid was spurred at least in part by allegations the company inflated its mental health-care costs to keep money it should have refunded to Florida's Medicaid program.
WellCare, which serves 2.3 million elderly, low-income and other members through government-sponsored Medicare and Medicaid programs, has said it has not been informed of the subject matter of the investigations, and does not know whether they might lead to fines, penalties, operating restrictions or impacts on the its past financial statements.
The company is also subject to investigations by New York and Connecticut officials and it previously said the U.S. Securities and Exchange Commission had requested unspecified information a day after the Florida raid.
The federal and Florida investigation followed the filing of a whistle-blower lawsuit by a former financial department employee of Harmony Behavioral Health, a WellCare subsidiary, according to the person who spoke to the Journal.
The company's practices allegedly defrauded the state and federal health-care program of more than $35 million over five years, according to the person familiar with the probe, the newspaper said.
In addition, investigators are examining an arrangement with a Cayman Islands subsidiary that could have helped the company misrepresent its expenses for care in a way that allowed WellCare to keep more of the mental-health payments it received, the source told the Journal.
WellCare had not yet be charged with any wrongdoing.
It said it was cooperating with the U.S. Department of Justice, the U.S. Federal Bureau of Investigation, the U.S. Department of Health and Human Services Office of Inspector General and the Florida Attorney General's Medicaid Fraud Control Unit.
WellCare also said on Friday that it had set up a special committee of directors to conduct an independent internal probe of issues raised by the government investigations and any accounting irregularities.
WellCare's stock, which was trading at higher than $122 per share prior to the October 24 raid, closed at $27.37 on the New York Stock Exchange on Friday.
(Reporting by Bill Berkrot)
