WellCare Says Court Will Permit Claims Pursuit Against Former Execs

John Commins, for HealthLeaders Media , July 8, 2010

WellCare Health Plans, Inc. said a federal court will allow the Tampa-based health insurer to pursue claims against former Chairman/President/CEO Todd Farha and other top executives.

In addition, WellCare said the U.S. District Court in Middle Florida this week dismissed all claims against current and former directors.

"This is a logical next step in the company's transformation that began in October 2007," said Alec Cunningham, WellCare's CEO. "This is another in a series of company efforts over the past two-and-one-half years to remediate past practices and forge a new future for members, associates, and stockholders."

In 2007, WellCare stockholders filed federal and state lawsuits against Farha, former CFO Paul Behrens, former General Counsel Thad Bereday, and other current and former WellCare directors. WellCare appointed an independent special litigation committee that concluded that the company should pursue claims against Farha, Behrens, and Bereday for breach of duty and breach of contract.

The SLC said it found no evidence supporting claims against the WellCare directors who were named in the actions. The SLC asked the federal court to make WellCare the plaintiff in the actions so it could pursue claims against the three former executives. In addition, WellCare entered a settlement with the original plaintiffs and their counsel.

"These are key legal developments for the company," said Timothy S. Susanin, WellCare's senior vice president, general counsel and secretary. "WellCare can now pursue its claims and hold these former executives accountable for their conduct."

WellCare has been the subject of widespread speculation and litigation for the past four years, after federal investigators raided the insurer's Tampa headquarters, carted off boxes of documents, and grilled executives.

In June, a federal judge unsealed a whistleblower complaint that accused WellCare of egregious conduct, including dumping hundreds of sick newborns and terminally ill patients from the membership rolls to bolster profits.

Florida Attorney General Bill McCollum told Health News Florida this month that former executives at WellCare are the subject of state and federal criminal investigations.

WellCare provides managed care services for Medicaid and Medicare for approximately 2.2 million people nationwide.

John Commins is a senior editor with HealthLeaders Media.

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