WellCare Health Plans, Inc. - Securities Class Action

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Stanford Law School

WellCare Health Plans, Inc. Summary: The original complaint charges Defendants WellCare, along with its Chief Executive Officer, President and Chairman of its Board of Directors, and its Chief Financial Officer and Senior Vice President with making a series of materially false and misleading statements related to the Company's business and operations in violation of the Securities Exchange Act of 1934 (the "Exchange Act").

On October 24, 2007, state and federal law-enforcement agents armed with a federal search warrant raided WellCare's Tampa, Florida headquarters. Agents from the Federal Bureau of Investigation, the Health and Human Services Department and the Florida attorney general's Medicaid fraud unit participated in the raid. WellCare provides managed-care plans for 2.3 million Medicare and Medicaid participants nationwide.

Specifically, the Complaint filed alleges that at all times during the Class Period: (1) it was not true that the Company was operating according to plan, when, in fact, throughout the Class Period, defendants had propped up the Company's results by manipulating WellCare's accounting for revenues and income, and failed to report proper expenses and other material information about the Company;(2) unbeknownst to investors, defendants had materially overstated the Company's profitability by failing to properly account for the Company's health care expenses and results of operations and by artificially inflating the Company's financial results; (3) it was also not true that WellCare contained adequate systems of internal operational or financial controls, such that WellCare's reported financial statements were true, accurate or reliable; (4) as a result of the foregoing, it also was not true that the Company's financial statements and reports were prepared in accordance with GAAP ad SEC rules. Accordingly, as a result of the aforementioned adverse conditions which defendants failed to disclose, throughout the Class Period, defendants lacked any reasonable basis to claim that WellCare was operating according to plan, or that WellCare could achieve guidance sponsored and/or endorsed by defendants.

Following the news of the raid on WellCare's headquarters, the New York Stock Exchange subsequently halted trading of shares in WellCare. The Company's shares fell $7.10, or 5.8%, to $115.17 per share at market close on October 24, 2007. Then, on October 25, 2007, when shares resumed trading, shares opened at approximately $64.00 per share, before reaching an intra day low of $27.50 and closing at $42.67.

On March 11, 2008, two similar class actions were consolidated and the Public Pension Funds was appointed lead plaintiff and Bernstein, Litowitz, Berger & Grossmann, LLP and Labaton Sucharow LLP were appointed co-lead counsel. On October 31, 2008, the lead plaintiff filed a Consolidated Class Action Complaint. On January 23, 2009, the defendants filed motions to dismiss the Consolidated Class Action Complaint. On September 28, 2009, Judge Virginia M. Hernandez Covington signed the Order denying the defendants’ motions to dismiss the complaint.

On April 26, 2010, the plaintiffs filed a motion to certify the class. On July 19, 2010, the case was order administratively closed for 150 days from the date of the order.

According to a press release dated August 9, 2010, the Court-appointed Lead Plaintiffs in the securities class action against WellCare Health Plans, Inc. ("WellCare") (NYSE: WCG) and its former senior executives today announced that they have reached a settlement with WellCare in which the total consideration to be paid is at least $200 million. The Court appointed Lead Plaintiffs are Teachers' Retirement System of Louisiana ("TRSL"), Public School Teachers' Pension & Retirement Fund of Chicago ("Chicago Teachers"), Policemen's Annuity and Benefit Fund of Chicago ("Chicago Police"), the New Mexico State Investment Council, and the Public Employees Retirement Association of New Mexico. The settlement funds will be distributed to WellCare common stock purchasers included in a consolidated securities class action presently pending before the Honorable Virginia M. Hernande Covington in the United States District Court for the Middle District of Florida. Under the terms of the settlement, WellCare agreed to pay a total of $87.5 million in cash and $112.5 million in freely tradable, registration-exempt bonds with a maturity date of December 31, 2016 and a fixed coupon of 6%. WellCare further agreed to pay an additional $25 million in cash if, at any time in the next three years, WellCare is acquired or otherwise experiences a change in control at a share price of $30 or more after adjustments for dilution or stock splits. WellCare also agreed that, should it recover any sums from Individual Defendants Todd S. Farha, Paul Behrens, and Thaddeus Bereday, it shall pay 25% of those proceeds to the Class. The settlement is subject to approval by the United States District Court.

According to a news article dated February 11, 2011, a federal judge in Tampa gave preliminary approval to a $200 million settlement between WellCare Health Plans Inc. and plaintiffs in a securities class action case stemming from allegations of health care fraud. The U.S. District Court for the Middle District of Florida scheduled a final approval hearing for May 4, a filing by WellCare with the Securities and Exchange Commission said. The settlement calls for WellCare to pay $87.5 million in cash and issue $112.5 million in bonds. A stipulation of the settlement includes the requirement that the company pay $52.5 million into an escrow account within 30 business days following the entry of the preliminary approval order, which would be March 24, the filing said.

The settlement was approved on May 6, 2011, and the action is now dismissed with prejudice.

On June 3, 2011, a Notice of Appeal was filed as to the order on the motion for attorney fees. That appeal was later dismissed.

INDUSTRY CLASSIFICATION:
SIC Code: 6324
Sector: Financial
Industry: Insurance (Accident & Health)

COMPANY/ISSUER NAME:	WellCare Health Plans, Inc.
COMPANY/ISSUER TICKER:	WCG
COMPANY WEBSITE:	http://www.wellcare.com

FIRST IDENTIFIED COMPLAINT IN THE DATABASE

Eastwood Enterprises LLC, et al. v. WellCare Health Plans, Inc., et al.

COURT: M.D. Florida	DOCKET NUMBER: 07-CV-01940
JUDGE NAME: Hon. Susan C. Bucklew
DATE FILED: 10/26/2007	SOURCE: Notice of Filing
CLASS PERIOD START: 05/08/2006	CLASS PERIOD END: 10/24/2007
TYPE OF COMPLAINT: Complaint (Unamended and Unconsolidated)
PLAINTIFF FIRMS NAMED IN COMPLAINT:
Coughlin Stoia Geller Rudman & Robbins LLP (Florida) 197 S. Federal Highway, Suite 20, Boca Raton, FL, 33432 (voice) 561-750-3000, (fax) 561-750-3364, info@csgrr.com/ Coughlin Stoia Geller Rudman & Robbins LLP (Melville) 58 South Service Road, Suite 200, Melville, NY, 11747 (voice) 631.367.7100, (fax) 631.367.1173, info@csgrr.com/ Genovese Joblove & Battista, PA (Miami) Bank of America Tower at International Place. 100 Southeast Second Street, 44th Floor, Miami, FL, 33131 (voice) 305.349.2300, (fax) 305.349.2310, info@gjb-law.com Kahn Gauthier Swick, LLC (New Orleans) 650 Poydras St. Suite 2150, New Orleans, LA, 70130 (voice) 504.455.1400, (fax) , lewis.kahn@kglg.com Kahn Gauthier Swick, LLC (NY) 12 East 41st Street, 12th Floor, New York, NY, 10016 (voice) 212.920.4310, (fax) 212.696.3730, info@kglg.com Law Offices of Marc S. Henzel (Bala Cynwyd) 273 Montgomery Ave. Suite 202, Bala Cynwyd, PA, 19004 (voice) 610.660.8000, (fax) 610.660.8080, securitiesfraud@comcast.net _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 6

DOCUMENTS FOR THE FIRST IDENTIFIED COMPLAINT
Class Action Complaint for Violations of Federal Securities Laws - Jury Trial Demanded
Type: Complaint		Date on the document: 10/26/2007
Order
Type: Order Appointing LP/LC		Date on the document: 3/11/2008

REFERENCE COMPLAINT

Eastwood Enterprises LLC, et al. v. WellCare Health Plans, Inc., et al.

COURT: M.D. Florida	DOCKET NUMBER: 07-CV-01940
JUDGE NAME: Hon. Virginia M. Hernandez Covington
DATE FILED: 10/31/2008	SOURCE: Docket
CLASS PERIOD START: 02/14/2005	CLASS PERIOD END: 10/25/2007
TYPE OF COMPLAINT: Consolidated Complaint
PLAINTIFF FIRMS NAMED IN COMPLAINT:
Bernstein Litowitz Berger & Grossmann LLP (New York, NY) 1285 Avenue of the Americas, 33rd Floor, New York, NY, 10019 (voice) 212.554.1400, (fax) 212.554.1444, blbg@blbglaw.com Labaton Sucharow LLP 140 Broadway, New York, NY, 10005 (voice) 212.907.0700, (fax) 212.818.0477, info@labaton.com _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 2

DOCUMENTS FOR THE REFERENCE COMPLAINT
Consolidated Class Action Complaint For Violations Of Federal Securities Laws
Type: Complaint		Date on the document: 10/31/2008
Order
Type: Order		Date on the document: 09/28/2009
Preliminary Approval Order
Type: Order		Date on the document: 02/09/2011
Order And Judgment
Type: Order		Date on the document: 05/04/2011
Order Granting Lead Counsel's Application For An Award Of Attorneys' Fees And Reimbursement Of Expenses
Type: Order Approving AF&E		Date on the document: 05/04/2011
Judgment In A Civil Case
Type: Other		Date on the document: 05/06/2011
Notice Of Appeal
Type: Notice of Appeal		Date on the document: 06/03/2011
U.S. District Court Civil Docket
Type: Docket		Date on the document: 08/19/2011

OTHER DOCUMENTS
Class Action Complaint for Violations of Federal Securities Laws - Demand for Jury Trial
Case Name and/or Number: Glenn Hutton, et al. v. WellCare Health Plans, Inc., et al.
Type: Complaint		Date on the document: 11/2/2007

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