Skip to comments.FBI raid shutters Medicare insurer (WellCare - formerly owned by George Soros)
Posted on 10/25/2007 7:52:37 AM PDT by wagglebee
For the past two years, analysts have been asking how fast-growing WellCare Health Plans of Tampa has been able to make so much money running government health plans for the poor and elderly. Now government investigators may be asking the same thing.
On a rainy Wednesday morning, more than 200 federal and state agents swarmed WellCare's campus on Henderson Road in Tampa, forcing employees onto the sidewalk and into their cars.
Steven Meitzen, 51, who arrived at WellCare about 9:40 a.m. for a job interview, said he was initially told it was a bomb scare. "Later on, I talked to someone who said the FBI had a subpoena and were looking for records," he said.
By midday, the complex's parking garages were half-empty, but federal agents remained busy. They were still milling around WellCare's buildings in the early evening; a Ryder truck was backed up to a loading dock.
The U.S. Attorney's Office in Tampa said little about the search, which involved personnel from the Federal Bureau of Investigation, U.S. Department of Health and Human Services and the Florida attorney general's Medicaid Fraud Control Unit. The search warrant is sealed.
Both federal and state officials, however, said that the investigation should have no impact on delivery of health care to the more than 2.3-million members of WellCare's managed care plans.
The company's customers are about evenly divided between Medicare and Medicaid plans. WellCare is the largest Medicaid provider in Florida, with more than 350,000 members. The company also offers Medicare Advantage plans to seniors in seven states and a stand-alone drug plan nationwide.
The timing of the raid could be detrimental as WellCare is in the midst of convincing seniors to sign up for its 2008 plans.
WellCare issued a release saying that it was cooperating with authorities and that essential services to members would remain uninterrupted. Though its customer service number was working Wednesday, WellCare's Web site was replaced with a notice saying, "We're sorry, but something went wrong. We've been notified about this issue and we'll take a look at it shortly."
The company, which went public in July 2004 at $17 a share, has had a meteoric rise, with its stock more than doubling in the past 12 months. On Wednesday, WellCare's shares dropped $6.77 or 5.5 percent, to $115.50 before trading was halted about 11 a.m. It ended the day down $7.10 at $115.17.
FTN Midwest analyst Peter Costa downgraded his rating on WellCare stock to "sell" from "neutral" on Wednesday, citing the search. Costa said the investigation appeared to be a criminal one.
"Criminal investigations are harder to prove, likely to be more company specific and carry stiffer penalties, including being barred from doing business with the government if it is for fraud, which it most likely is given the departments involved," Costa said in a research note.
Thomas Carroll, analyst with Stifel Nicolaus in Baltimore, called the raid "ominous" and downgraded WellCare shares to "sell" from "hold" in a note to clients. Contacts within the company said BlackBerries, computers and files were seized from corporate, marketing and human resources offices, according to Carroll.
Carroll suspects the raid is potentially the result of a lawsuit in which an employee brought a matter to the attention of authorities.
"When the FBI and HHS raid a health care company, the outlook on earnings, legal proceedings and the entire operations of the company can be questioned," Carroll said.
WellCare's business practices have come under increased criticism over the past several months. Last spring, the company said independent sales agents in Georgia enrolled dead people in Medicare plans. In May and June, WellCare representatives appeared along with other insurance executives at hearings in the Senate and House into aggressive Medicare marketing practices. WellCare and six other insurers subsequently agreed to a temporary halt in marketing one type of Medicare plan, while promising to initiate consumer safeguards. In August, however, Medicare cited WellCare once again for violating several provisions of its Medicare contract, including sales practices.
WellCare, which had earnings of $139.2-million in 2006, gets all of its nearly $4-billion in revenues from state or federal governments. Profits come from the difference between the amount received from the government and the amount spent on overhead and medical care for its members.
The company routinely has outperformed its competition; for the quarter ending in June, the company said just 80.8 percent of its revenue was spent on medical claims, down from 82.7 percent a year ago.
WellCare's high margins have had analysts scratching their heads. In April, two Wall Street analysts said Florida in particular was too generous in its Medicaid reimbursement to WellCare. The analysts, with CIBC World Markets and Goldman Sachs & Co., were particularly critical of WellCare's use of a subsidiary in the Cayman Islands for reinsurance, saying it allowed the company to shift money in the form of reinsurance premiums.
WellCare said its reinsurance arrangement had been approved by stateregulators and rejected claims it was overpaid.
Florida Medicaid payments were raised 7.5 percent in July, to an average of $215 per member per month. Cuts of about 1.5 percent could be on the way in January, however, if Gov. Charlie Crist approves recommendations made during the recent special legislative session.
Medicare reimbursements average about $800 per member per month and will increase 3.5 percent next year. Because the federal government wanted to encourage private insurers to offer Medicare plans, it pays about 12 percent more for seniors on private plans than it does for traditional Medicare.
WellCare was a slow-growing Florida company until 1992 when its owner, Dr. Kiran Patel, sold it to a New York investment group led by financier George Soros. The bankers hired Todd Farha, an aggressive Harvard MBA, to transform the company. Under his leadership, WellCare's earnings have increased eight-fold and the company's investors and executives like Farha have profited handsomely from appreciation in its stock.
In an interview last year, Farha credited WellCare's success with hard work, attractive member benefits and close attention to the basics. But he has also nurtured the kinds of relationships invaluable to a company dependent on government funding.
WellCare and its affiliates have given the Republican Party of Florida some $105,000 in contributions this year, according to state election records. They've also given the Florida Democratic Party $5,000 this year. In 2006, WellCare's PAC gave $66,000 to federal candidates, all Republicans.
And the company's board has included the head of the Florida agency that oversees Medicaid, Dr. Andrew Agwunobi. Agwunobi was a director for six months before being picked to head the Agency for Health Care Administration. For his six months service on WellCare's board, Agwunobi received stock, which he sold for more than $1-million.
Current WellCare board members include former Florida Sen. Bob Graham and Ruben King-Shaw, former head of Florida's health agency and an ex-deputy chief at Medicare.
Florida GOP voters made a HUGE mistake in voting for Crist rather than Gallagher.
I hope some good will come from this when they realize their mistake, and research candidates better after this.
this via e-mail:
“The following data was published Sept.3, 06 St. Petersburg Times (Fla.) on the 2 Republican and 2 Democratic Candidates for FLA. GOVERNOR and the question on voting for or against AMNESTY:
In today’s St. Petersburg Times, there was an article in which four main contenders for Florida Governor were asked a series of questions. I direct your attention to the two questions the paper asked the candidates about immigration:
State: 20 questions for the candidates for governor:
15. Do you support a federal proposal for illegal immigrants who learn English and pay fines and abide by the law to earn citizenship?
Jim Davis: Yes ——— Rod Smith: Yes ——— Charlie Crist: Yes ——— Tom Gallagher: No
16. Should we license illegal immigrants to drive?
Jim Davis: No ——— Rod Smith: Yes(with guest worker program). -——— Charlie Crist: Yes (in limited circumstances) ——— Tom Gallagher: No”
The Republican Party of Florida boosted his (Crist) campaign with a donation of over $275,000.
In 1995, the newsletter of a group called Choice in Dying listed seven organizations in a Guide to Right-to-Die Organizations. At least four of them (Compassion in Dying, Death with Dignity Education Center, the Oregon Death with Dignity Legal Defense and Education Center, and Choice in Dying itself) have attracted funding from large foundations.
One such foundation is George Soross Open Society Institute (OSI). The OSI, through its Project on Death in America, gives millions of dollars for enhancing end-of-life care and none of the Projects money is used for assisted suicide purposes. But the OSI provides grants for assisted suicide advocacy through OSIs Presidents Fund in its U.S. Programs office.
"We will not be silent. We are your bad conscience. The White Rose will give you no rest."
WellCare Health Plans of Tampa, a firm which has made scads of money administering government health care, and huge profits for George Soros, who was once its largest shareholder, has been raided by the FBI and shuttered. The St. Petersburg Times reports:
The company, which went public in July 2004 at $17 a share, has had a meteoric rise, with its stock more than doubling in the past 12 months. On Wednesday, WellCare's shares dropped $6.77 or 5.5 percent, to $115.50 before trading was halted about 11 a.m. It ended the day down $7.10 at $115.17.............................................
Crist raised sixty million and there's no way it was from Floridians. We're still waiting for prop tax and insurance reform.
I wonder how Wellcare patients made out. Maybe they’ll let us know.
When Crist was Fla AG, there were 94,000 cases of Medicaid Fraud. I guess he shredded those before he became our globally warmed governor. He’s been with Bubba.
The donations were probably done to make sure no one investigated the organization. ...ha ha ha....PSYCH, we caught you anyway!
The Human Life Foundation's Defender of Life annual award dinner this month was an eye opener. The award recipient was Rep. Chris Smith of New Jersey, and in the brochure noting his accomplishments I learned that the congressman is co-chairman of the bipartisan pro-life caucus. Bipartisan? In amazement, I asked him if there really are pro-life Democrats in Congress. "Oh yes," he assured me, "about 30." He went on to name one, but I'm not going to repeat the name because he and the others probably get enough grief from other congressional Democrats.
A senior editor for National Review, Ramesh Ponnuru, introduced Mr. Smith. In his book, "The Party of Death" Mr. Ponnuru makes no bones about which political party deserves that description. I'm not sure whether it's wise to use such hyperbolic language about the nation's majority political group, and yet maybe strong words are overdue in describing the culture that's being promoted today. Abortion on demand, embryonic destruction, euthanasia, and animal rights now displace human rights. It wasn't the GOP pulling the plug on the disabled Terry Schiavo.
My sisters are Democrats, and one refuses to vote for any Republican. They are also Catholics, and Catholics have traditionally voted Democrat. I'm still amazed by how loyal Catholics are to a political machine that champions causes directly opposed to church teaching. Although I have never been a registered Democrat, I've voted for and campaigned for that party because it once fought for basic human rights. That is no longer the case. Senator Miller, who formerly represented Georgia in the upper chamber, had it exactly right when he wrote his book, "A National Party No More: The Conscience of a Conservative Democrat." He frequently says that he did not leave the Democratic Party. It left him. The Human Life Foundation, based in Manhattan, publishes a review of essays and reprints of articles exploring all aspects of respecting life. A self-described Jewish atheist, Nat Hentoff, was honored by the foundation a few years ago, and he declared that respect for life is not a religious issue: It is a fundamental human rights issue that has been clouded and deliberately distorted for a left-wing political agenda. The real horror of the Terry Schiavo case, Mr. Hentoff insists, is the danger it unleashed to the rights of the disabled................
Now what does this all mean about the anointed candidates? The mantra of the far left purports that most Americans wanted innocent Terri to suffer the death she received and that those were bad who thought an innocent should be helped. We have seen this mantra applied time and again in thinly veiled phrases so we don't make this stuff up.
Now how does this comport with elite candidates saying the very same thing? Say it ain't so, candidates! Tell Bobby Schindler you were mistaken and didn't really want his sister killed!
WASHINGTON, Oct. 25 (UPI) -- Former U.S. Sen. Fred Thompson, R-Tenn., joined other GOP front-runners this week in saying Congress should have stayed out of the case of Terri Schiavo.
Thompson had already left the Senate in 2005 when many Republicans voted to get the case into federal courts. Florida courts had ruled that Schiavo's husband had the right to have her feeding tube removed, 15 years after she lapsed into an apparent vegetative state.
While a number of Republican politicians and pundits embraced the cause of Schiavo's parents and siblings at the time, most have moved away from the case, The Boston Globe reported. Few office-seekers or attendees at the "Values Voters" Summit in Washington last weekend mentioned Schiavo, even though her brother, Bobby Schindler, was there.
Sen. Sam Brownback, R-Kansas, who backed the Schindlers in 2005 and continues to support their position, ended his presidential campaign last week.
U.S. Sen. John McCain, R-Ariz., voted with other Republicans on the case in 2005 but started backing away from that position quickly and now says it should have been a state matter. Former Massachusetts Gov. Mitt Romney and former New York Mayor Rudy Giuliani say they agree.
Washington, DC (LifeNews.com) -- With Fred Thompson becoming the latest Republican presidential candidate to say that the federal and state government shouldn't have been involved in trying to save Terri Schiavo's life, her brother says he wants to talk with the GOP hopefuls.
He says they would be more likely to support the actions Congress and the Florida legislature took to try to help his family prevent her former husband from subjecting her to a painful euthanasia death if they knew more about her case.
"I want to personally talk with them about Terri's case," Bobby Schindler told the Boston Globe. "They need to be fully informed. There obviously exists a lot of confusion about my sister's situation."
Schindler told the newspaper that he plans to write each candidate a letter about Terri's circumstances and the painful 13-day starvation and dehydration death her former husband Michael made her endure.................
Giuliani, Romney and McCain earlier this week at a debate sponsored by Fox News Channel and the Republican Party of Florida said they disapproved of the decision by Congress in 2005 to become involved in the Terry Schiavo case, an indication of a "sharp departure from past Republican strategy" on end-of-life care for patients, the Boston Globe reports. According to Giuliani, the decision on care for Schiavo should have remained with the family. Romney said that the "decision of Congress to get involved was a mistake," and McCain said that Congress "acted too hastily." Huckabee said, "I wasn't sure how the federal government had a role in all that" (Kranish, Boston Globe, 10/25).
Washington, DC (LifeNews.com) -- Rudy Giuliani continues to drop in national and state polls following a seminal survey issued just two weeks ago by the Des Moines Register. That poll was the first to show Giuliani's campaign hurting as more Republicans recognize his pro-abortion view and newer polls show his numbers continuing to drop.
May 6, 2005
The proxy also disclosed that financier and philanthropist George Soros no longer is involved with WellCare. Soros Private Equity Investors had owned about 80 percent of WellCare at the time of the IPO.
In December, Soros Private Equity Investors sold 5.6 million shares for about $170 million.
In April, Soros spun off the $1.3-billion private equity group and the new firm was renamed TowerBrook Capital Partners. TowerBrook is headed by Neal Moszkowski, who previously led Soros Private Equity. Moszkowski also is chairman of the WellCare board.
TowerBrook is now the single largest shareholder in WellCare, with 16.7 million shares or 43.2 percent of the stock outstanding on April 25.
Gov. Jon S. Corzine on Tuesday marked the start of construction on what he hailed as a world-class research facility many hope will make the state a global leader in stem cell work. "The Stem Cell Institute of New Jersey will serve as the nexus of cutting edge scientific breakthroughs that will improve and save the lives of millions of our fellow citizens," Corzine said in an afternoon ceremony near the construction site.
This just in from the WSJ. Could it be WellCare will be on WelFare?
I get so confused because I keep mistaking soros for a contageous disease.
WellCare Health Plans Inc.'s market value was cut by more than half when the stock reopened Thursday following news of a government raid of the managed-care provider's Florida headquarters.
On Wednesday, state and federal law-enforcement agents armed with a federal search warrant raided WellCare's headquarters in Tampa, Fla.
The New York Stock Exchange subsequently halted trading of shares in WellCare, which provides managed-care plans for 2.3 million Medicare and Medicaid participants nationwide. Before the halt, shares had fallen 5.8% Wednesday to $115.17...........................
Great column by Colon. Thanks for posting the link.