Filed under: Major movement, SEC filings, Bad news, Management, Law, Scandals

WellCare Health Plans, Inc. (NYSE: WCG) lost its CEO, CFO and general counsel on Friday. The company is currently under investigation for irregularities in Medicaid and Medicare billings in Connecticut and Florida. The SEC has requested information, as has the U.S. Department of Justice. Agencies are investigating whether WellCare overbilled for mental health care provided as part of Florida’s Medicaid program. WellCare also has a subsidiary in the Cayman Islands. Investigators are looking into whether reinsurance arrangements through that subsidiary led to misrepresentations of costs for providing care. WellCare has not yet filed papers with the SEC for the previous quarter and will be late filing its annual report. Earnings reports for the first several quarters in 2008 will also be late.

Given the background of problems, some of which might prove very expensive to correct, why have investors bid up the stock over 11% on the news that a new management must soon take over? The stock closed on 28 January at $48.08, up $4.96 or 11.5% (though on the 29th it dipped slightly back to $47.18). Go figure!

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This entry was posted on Wednesday, January 30th, 2008 at 2:09 am and is filed under Stocks Money News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.