Wellcare Offices Raided by FBI

Oct 24, 2007

  1. 2112Greg

    2112Greg Guru

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    Could this spell the end of the gravy train?

    FBI Raids WellCare's Tampa Office
    By Elaine Silvestrini of The Tampa Tribune
    Published: October 24, 2007
    TAMPA - A national insurance company's local office is the subject of an FBI raid this morning, authorities said.
    The Hillsborough County Sheriff's Office was notified about the raid at WellCare Health Plans, but it is not assisting, said sheriff's spokeswoman Debbie Carter.
    "From what we were told, it's all FBI," she said.
    The U.S. attorney's office issued a news release saying law enforcement personnel with the FBI, U.S. Department of Heath and Human Services-Office of
    Inspector General, and the Florida attorney general's Medicaid Fraud Control Unit participated in the execution of a federal search warrant at the headquarters of
    WellCare Health Plans.
    On the New York Stock Exchange, trading in the company's shares was halted this morning.
    WellCare has more than 2.3 million members. There are no commercial accounts; all are Medicare or Medicaid. Of those, 971,000 are Medicare drug plan
    members, WellCare offers its Medicare drug plans in all 50 states and the District of Columbia. WellCare is one of the nation's largest Medicare Part D providers.
    WellCare has contracts with seven state Medicaid programs, but Florida is by far WellCare's largest client, with more than 450,000 enrolled in its health plans. Of
    the $1.7 billion the state paid HMOs last year, WellCare's two plans took in half, almost $850 million.
    The U.S. Attorney's news release says the "ongoing investigation does not directly concern, nor should it have any impact upon, the delivery of any health care
    service to any person."
    The FBI referred questions to the U.S. attorney's office.
    The purpose of the search at the company's office, on 8735 Henderson Road, near Waters Avenue, was not known.
    FBI agents could be seen around the building this morning, and there appeared to be a large number of people leaving the parking lot. People who tried to enter the
    building were turned away. Agents could be seen taking empty boxes into the facility and walking out with boxes. It was not clear what, if anything, was in the
    WellCare Health Plans is a Tampa-based company that has become a national provider of health insurance for Medicaid and Medicare patients under government
    The timing of the search comes as Congress is debating whether to eliminate funding for Medicare Advantage options.
    Today, a group called The Coalition for Medicare Choices has organized a rally of seniors in the nation's capital in support of Medicare Advantage.
    Democrats in control of the U.S. House of Representatives have been targeting Medicare Advantage because, they say, these private plans sold by WellCare and
    other companies are paid too much by the government, exceeding costs under the traditional Medicare program.
    They also have pointed to the complaints that have surfaced nationally about some misleading sales tactics tied to such programs.
    These Democratic efforts have included efforts to cut funding for Medicare Advantage programs $50 billion during the next five years in a House bill that was
    passed Aug. 2 to renew and expand government sponsored children's health insurance.
    But the Senate version of the same bill did not call for such cuts. And the Bush administration has threatened to veto any such move.
    Ultimately, the cuts contained in the House version of the bill were dropped from a final version of the bill last month.
    But Democrats continue to push for similar cuts to Medicare Advantage in other legislation.
    Florida GOP Reps. C.W. Bill Young and Ginny Brown-Waite have been among the staunchest defenders of Medicare Advantage; Brown-Waite has lashed out at
    the AARP for supporting efforts to cut funding for these programs.
    This year, nearly 8.3 million, or about one-fifth, of the aged or disabled Medicare beneficiaries nationally are enrolled in Medicare Advantage, according to the
    Congressional Budget Office.
    That includes 758,953 of the more than 3.1 Medicare participants in Florida.
    In June, after congressional committees accused WellCare of Medicare marketing abuses, the company promised to fix its problems.
    It stopped marketing its most problem-plagued plan and announced new customer protections. Todd Farha, chairman and chief executive, promised "best-in-class
    compliance practices to protect seniors."
    The fixes are taking longer than planned. This month, the Centers for Medicare and Medicaid Services released documents that show WellCare was cited again in
    August for violating eight provisions of its Medicare contract.
    The violations include some of the same sales practices the Tampa company was accused of in April and some new ones. For example, the report says the company
    failed to meet the 60-day deadline on appeals from members who were denied coverage in 40 percent of the cases studied.
    Company spokeswoman Amy Knapp said then that the company had complied.
    "WellCare is confident that it addressed CMS' concerns in its corrective action plans and expects to receive notification from CMS that its plans have been
    approved," she wrote in an e-mail.
    2112Greg, Oct 24, 2007
  2. MedSuppPro

    MedSuppPro Guru

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    Fasten your seat belts. The FBI does not send 200 agents to discover why Mrs. Jane Doe's appeal was not processed in 60 days.

    Look at the stock prices of most of these high fliers and ask yourself is this sustainable?

    Don't get me wrong. I don't want to pass judgment on WellCare. This is an industry that for the most part, I'm proud to represent. For the Medicare person whom can't pay their MedSupp premium anymore, or the un-insurable, these plans work.

    MA plans, as we know them today, are going to go to the MC+Choice scrap pile by the end of 2008. And with it will be the fly by night companies and agents whom got into this business for one and only one reason. To make a quick buck$$$$$$.
  3. Kimber

    Kimber Super Genius

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    I think you may be right. Thankfully, they have that lovely guaranteed issue status for the clients when things go sour for part C.
    Kimber, Oct 24, 2007
  4. midwestbroker

    midwestbroker Guru

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    My guess is that there was some embezzling going on in the Wellcare offices.

    If they were doing something against CMS guidelines, I cannot imagine that CMS would call in the FBI. CMS would have suspended their plans. The FBI investigates federal crimes, embezzlement being one of them.

    Just my thoughts since the story did not make it clear why they were there.
  5. TonyC

    TonyC Guru

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    ...their CEO did make alot of money recently on a big stock cash-out.

    Hope its not another Enron case....
    TonyC, Oct 24, 2007
  6. 2112Greg

    2112Greg Guru

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    Yea, and all this after yesterday when I quoted a MA plan to a 72 year old woman who has congestive heart failure. I've only ever gotten people OFF these MA plans and back to original Medicare.

    Getting the FBI involved to this degree speaks pretty loudly to me that some crazy stuff was going on there. Time will tell to see what it actually was...
    2112Greg, Oct 24, 2007
  7. GreenSky

    GreenSky Guru

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    The thing that really KILLS me is that I bought their stock for $65 a year ago and have been toying with the idea of selling for the past 2 weeks.

    Maybe the FBI is there only to cogratulate them on having great govenment plans or to film an episode of "Bones." Yeah, that's the ticket!

    GreenSky, Oct 24, 2007
  8. somarco

    somarco GA Medicare Expert

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    somarco, Oct 24, 2007
  9. honestagent

    honestagent Guru

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    Well I'm just having a field day over the news; the way they handled certain cases with commissions and punishing the whole earlier this year to recertify due to those few agents who forged dead beneficiaries' signatures!!!

    What goes around comes around. Wellcare, was sooooooooo concerned at that time about bad publicity...well there ya have it folks.. they sure got it now!

    Do good and do the right thing or it will come back 10 fold... look at where they're at now...

    Frankly, I'm glad to hear about it; I think they deserve that and more...

    Any chances they'll be shut down for 08 selling season... hmmmmm.... that's what a few agents I personally know are speculating.. what do you agents think?
  10. allhealthandlife

    allhealthandlife Guest

    From what i have been reading this raid seems to be for Medicaid billing fraud which if its true would shut down Wellcare because they would be barred from doing business with the government - 100% of their business come from " govment cheese " In Florida they got more than 50 % of the Medicaid dollars but i guess that wasn't enough.

    I believe agent commissions are in the back of the line when an insurance company goes belly up.