WellCare CEO Has Seen This Movie Before

Meanwhile, Farha pursued his own entrepreneurial activities before accepting a job as CEO of privately held Best Doctors Inc. Farha was still running that small company, providing referral services to patients with critical illnesses, when WellCare ran into financial hardships that ultimately led to its takeover by Farha and other investors. Indeed, WellCare had previously been declared insolvent -- requiring multiple cash infusions -- before Farha took control of the company.

Under Farha's leadership, however, WellCare quickly thrived. By 2004, just two years after the buyout, Farha was ready to take the rapidly growing company public. Since then, WellCare has constantly beaten Wall Street expectations and seen its stock soar -- until now.

Today, WellCare leaders once again find themselves engulfed by challenges and faced with possible disaster. But this time around, they seem to be writing a whole new chapter for the history books.

"The high-profile raid on the company's headquarters last week by a reportedly couple hundred federal and state representatives was unprecedented in managed care," Bear Stearns analyst John Rex noted last month. "To be sure, there have been a number of fraud investigations on the facilities side of healthcare services over the last few decades, but precedents for such events in managed care are more scarce."

Thus "we remain sidelined, awaiting any indication as to scope of issues so we can actually assess contract loss risk," added Rex, whose firm seeks to do business with the companies it covers. But "chasing fraud stories in healthcare services -- alleged or real -- has been historically a tough game."

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