UPDATE: WellCare To Pay $80 Million In Deal To End Medicaid Probe

(Updated with more details of the agreement and comments from government investigators.)

 
   DOW JONES NEWSWIRES 
 

Wellcare Health Plans Inc. (WCG) will pay $80 million as part of a deferred-prosecution agreement with state and federal officials to resolve allegations it tried to defraud Florida's Medicaid and Health Kids programs.

Shares jumped 16% to $18.17. The stock is up 41% this year, but remains far below the $128 level shares were at in October 2007 as agents of the Federal Bureau of Investigation, the Department of Health and Human Services and the Florida attorney general's Medicaid fraud unit raided WellCare's headquarters in Tampa.

The investigation centered at least in part on allegations WellCare inflated the amount it spent on mental-health care in order to keep money it should have refunded to Florida's Medicaid program.

"In this case, corporate greed was responsible for the theft of funds from critical government programs," said FBI Special Agent Steven E. Ibison.

Company executives on Tuesday expressed pleasure with the deal, saying WellCare cooperated fully with the probe and has enacted various compliance efforts as a result.

"Compliance with all of the laws and regulations governing WellCare's business is a top priority, not only for our senior leadership team, but for all of our associates," said Charles G. Berg, WellCare's executive chairman.

The agreement with Florida and federal officials calls for WellCare to retain an independent monitor for 18 months. The company will pay $80 million as part of the deal, $35.2 million of which it paid last August. Another $25 million is due within one week of the agreement's finalization, with the remaining $19.8 million to be paid by year's end.

As part of the agreement, WellCare must accept and acknowledge full responsibility for the conduct that led to the government's investigation. Prosecutors said they are still investigating individual WellCare executives and employees who allegedly participated in the fraud.

"The investigation of these individuals will continue until all those criminally responsible have been brought to justice," Ibison said.

-By Kevin Kingsbury, Dow Jones Newswires; 201-938-2136; [e-mail]