FL: WellCare Executives Quit as Fraud Probe Continues

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Jan. 25 (Bloomberg) -- The top managers of WellCare Health Plans Inc., the insurer being investigated by the FBI for possible fraud, resigned. The shares rose in late New York trading.

Chief Executive Officer Todd Farha, finance chief Paul Behrens and general counsel Thaddeus Bereday quit today and will remain as non-executive employees until March 31, the company said in a statement. The board of the Tampa, Florida-based company named Charles G. Berg, 50, as executive chairman and Heath Scheisser, 40, as president and chief executive officer.

"If management is ousted, to me that's somewhat of an admission of guilt, which means the probability of news flow over a negative outcome is probably increased,'' said Thomas Carroll, an analyst at Stifel Nicolaus & Co. in Baltimore, in a telephone interview today. ``That doesn't do anything good for the stock price.''

Analyst Carl McDonald of Oppenheimer & Co. in New York said yesterday that new management would make WellCare an ideal acquisition target for one of the two largest insurers, UnitedHealth Group Inc. or WellPoint Inc., at $70 a share.

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Relationship Focus

The investigations by the FBI and Florida officials are believed to be focused on relationships between WellCare subsidiaries, the Florida health plans and the Harmony Behavioral Health unit and possible overpayments, the company said.

Bloomberg