WellCare May Pursue Cash From Former CEO

WellCare Health Plans Inc., the Florida-based health insurer, may try to recover money from former Chief Executive Officer Todd S. Farha after finding claims of financial misstatements "have merit."

Claims against Farha, who also had been chairman, and former Chief Financial Officer Paul L. Behrens, may be pursued as part of a proposed lawsuit settlement, Tampa-based WellCare said in a Securities and Exchange Commission filing yesterday. The settlement with a group of WellCare shareholders would drop claims against seven other current or former board directors, the filing said.

Farha, Behrens and Thaddeus Bereday, the insurer's general counsel, resigned in January 2008 while WellCare was being investigated by the FBI and Florida officials. The case resulted in the company agreeing to pay $90 million to settle regulatory claims it underpaid refunds and inflated results. In July, 2008, the insurer restated earnings for the previous four years.

After an internal investigation sparked by the lawsuit, WellCare "has determined that certain claims against the officer defendants have merit and it intends to pursue them in the manner it deems appropriate and in the best interests of WellCare, which may result in a recovery," according to yesterday's filing.

Farha Named

The proposed settlement names Farha, Behrens and Bereday as "officer directors" subject to further action by WellCare. The settlement, backed by both sides in the suit, must win the approval of a U.S. District Court judge in Tampa. A hearing on the proposed deal is scheduled for July 7, the filing said.

Amy Knapp, a WellCare spokeswoman, in an e-mail today declined to provide details beyond what was in the filing. Maya Saxena, a Boca Raton, Florida, attorney for plaintiffs in the suit, didn't immediately return a call.     Calls seeking comment weren't immediately returned by Thomas Newkirk, Farha's attorney in Washington; Lauren Valiente, Behrens' attorney in Tampa; or Keith Eggleton, Bereday's attorney in Palo Alto, California.      WellCare rose 69 cents, or 2.5 percent, to $28.89 in New York Stock Exchange composite trading at 12:39 p.m. and climbed 85 percent in the 12 months before today.

The company insures about 2.2 million people in government- backed Medicare and Medicaid policies, according to an earnings statement today.      WellCare reported 17 cents a share in adjusted first- quarter profit, topping the 14-cent average estimate of nine analysts in a Bloomberg survey. The insurer boosted its forecast for full-year earnings to a range of $2 a share to $2.20 a share, citing lower-than-projected medical costs.