To get a search warrant against a company that size, they have to have inside information, said lawyer Marc Raspanti, a shareholder in Miller Alfano & Raspanti in Philadelphia. FBI were involved, so it looks to me that theyre looking to make a criminal case in addition to a civil case.
The participation of Floridas Medicaid fraud-busters doesnt mean the investigation is particular to either Florida or Medicaid, Raspanti and others said. Nearly half of WellCares members are in its Medicare Advantage plans or Part D drug plans.
A company does not set up a system in which theyre ripping off just one statetheyre ripping off everybody, said Patrick Burns, spokesman for Taxpayers Against Fraud, a Washington-based group that supports whistle-blower lawsuits made under the False Claims Act. Burns said he suspects such a lawsuit filed under seal triggered the governments interest.
The investigation has created a grim backdrop for the companys third-quarter earnings call next week, which is scheduled to go on as planned, according to an audio message from Chairman and Chief Executive Officer Todd Farha posted on WellCares Web site.
We are continuing to pay our provider claims timely ... and we continue to provide access to covered healthcare services, Farha said. As you would expect, we are not in a position to share with you additional details regarding this investigation.
WellCare earned $139.2 million off revenue of $3.8 billion in the fiscal year ended Dec. 31, 2006. Trading of the companys shares was halted on the morning of the raidtheyd sold for their highest price ever, $128.42, a day earlierand then plummeted when trading resumed the next day, losing more than 70% of their value by Oct. 26.
Whether that levels out or not will drive the release of information, said Robert Rhoad, a partner in Crowell & Moring in Washington. Rhoad added that the company is better off genuinely cooperating with the government investigators before they start viewing everything through a dirty window thats been created by that standoff.