WellCare Settlement Tally Tops $427 Million
WellCare Health Plans. Inc. announced Monday that it will pay about $194 million to settle a class-action securities law suit that arose from a 2007 fraud investigation.
The Tampa-based insurer said Monday's class-action settlement resolves all litigation stemming from the four-year-old investigation and—combined with other state and federal lawsuits and fines—bumps the total settlement costs in the last 15 months to about $427.5 million.
Under the agreement, which awaits approval by a U.S. District Court judge in Middle Florida, WellCare will make cash payments of $52.5 million within 30 days of approval, and $35 million by July 31, 2011. WellCare will give the plaintiffs tradable unsecured bonds at a face value of $112.5 million, with a fixed coupon of 6%, and a principal maturity date of Dec. 31, 2016.
If WellCare is sold within the next three years at a share price of $30 or more, the insurer will make an additional $25 million payment. WellCare said the settlement has been accrued in the second quarter of 2010 at approximately $194 million.
On June 24, WellCare agreed to pay $137.5 million to settle fraud allegations with the U.S. Attorney's Office in Tampa, the U.S. Department of Justice, and the state of Connecticut.
"Upon final approval of these two matters, WellCare will have addressed the financial aspects of the legal proceedings that began in late 2007," said WellCare Executive Chairman Chuck Berg said in a media release. "These resolutions will enable us to focus on our mission of serving some of the country's most vulnerable populations and to invest in our priority areas: healthcare quality and access, compliance, infrastructure and growth."