Friday, October 26, 2007
The search of WellCare Health Plan's headquarters by, among others, FBI agents (earlier post here) triggered -- as expected -- an immediate response: let's hire lawyers! A press release (on Business Wire here) states that since the search and carting away of boxes of documents, the company has:
- Been in direct contact with its Board of Directors, including members of the audit committee;
- Committed to cooperating with the federal and state authorities involved in the investigation;
- Retained the law firms of King & Spalding and Greenburg [sic] Traurig to assist the Company with responding to the investigation;
- Engaged with the Company’s auditors, Deloitte & Touche LLP;
- Been in contact with key constituents, including state and federal regulators in each of the Company’s markets.
It's not clear why two national law firms have been retained, but maybe two -- or twenty counting all the partners and associates -- heads are better than one. WellCare's stock lost over 60% of its value the day following the search, showing the devastating effect a criminal investigation can have for a company's investors. While the scope of the investigation is not yet clear, any inquiry into possible healthcare fraud carries a serious danger of criminal and civil fines and penalties, and could even include exclusion from the Medicaid program if an extensive fraudulent scheme were uncovered. (ph)