WellCare settles SEC probe; announces layoffs

Tampa, Fla.-based Medicaid and Medicare contractor WellCare has agreed to pay a $10 million fine and give up $1 million in gains in a settlement with the U.S. Securities and Exchange Commission.

The company was accused of defrauding Florida's Medicaid and Healthy Kids programs out of $40 million and then making misleading earnings statements based, in part, on those payments.

Thomas F. O'Neil III, WellCare's senior vice president and general counsel, said the company was glad to have the investigation resolved and is "committed to enterprisewide regulatory compliance and ethical business practices." It did not admit or deny wrongdoing.

The deal was announced May 18, just a few weeks after separate court settlements with the Florida attorney general's office and U.S. Attorney's office that allowed the company and executives to avoid criminal prosecution by paying back the $40 million it is accused of keeping improperly, as well as paying a $40 million fine.

According to WellCare, the company is in talks with the U.S. Dept. of Health and Human Services' Office of Inspector General and the U.S. Dept. of Justice Civil Division to resolve allegations over the same issues.

WellCare agreed it would neither admit nor deny the allegations against the company.

WellCare contracts to provide Medicare and Medicaid benefits to a combined 2.5 million people. It also acts as a Medicaid contractor in Georgia, Hawaii, Illinois, Missouri, New York and Ohio.

Its Medicare plans had been sold nationwide, but in February the Centers for Medicare & Medicaid Services sanctioned WellCare, citing problems with its enrollment activities and poor oversight of its brokers, and ordered it to stop marketing its plans or enrolling any new members.

WellCare announced in May that it would stop offering Medicare private fee-for-service plans and subsequently laid off about 360 employees, or about 9% of its work force.