Saturday, November 3, 2007
The investigation of Medicaid benefits management company WellCare Health Benefits, Inc., is featuring a growing roster of law firms as the company deals with a healthcare fraud investigation. As discussed in an earlier post (here), 200 federal and state agents executed a search warrant at WellCare's Tampa headquarters on October 25. A Wall Street Journal story (here) states that the focus of the investigation is accounting for mental health benefits that may have allowed the company to retain money -- perhaps as much as $35 million -- that should have been refunded to the the state of Florida, its largest client with over 350,000 beneficiaries. Not surprisingly, there is a qui tam suit, although that remains sealed at this point. The company's stock has dropped nearly $90 since the search, and a flurry of shareholder derivative and securities class actions have been filed.
A company press release (from Business Wire here) discloses that WellCare's special investigating committee has retained Davis Polk to advise it, and the audit committee has retained Goodwin Procter. WellCare's earlier announcement disclosed that it had retained King & Spaulding and Greenberg Traurig in connection with the investigation. That's four national law firms, which can be added to the likely phalanx of lawyers hired for individual officers who may be targets of the investigation, and perhaps even a few for the myriad witnesses who will be interviewed in the internal investigation and perhaps later called before the grand jury.
Do not be surprised if the company's administrative expenses shoot through the roof the next couple quarters as all those legal bills come due. (ph)