WellCare, Tenet Have More Than Probes in Common

If nothing else, Bearn Stearns analyst John Rex says, "One has to be daunted by the massive force utilized and implied gravity" of the mysterious WellCare probe.

"Most of the fraud issues in health care services over the past decade have generally been with the facilities companies, and after fines and executive firings, the companies did continue to operate," notes Rex, whose firm seeks to do business with the companies it covers. "However, that business is about buildings, equipment and -- from a regulator perspective -- assuring community access to care."

In contrast, he adds, managed-care companies "have almost nothing in the way of fixed assets. [So] there are 'go-to-zero' scenarios for these stocks."

For now, Rex is maintaining a peer-perform rating on WellCare shares. The stock, up 45 cents to $34.20 on Friday, has lost roughly 70% of its value since the sweeping government raid less than one month ago.

'The Trust Program'

After Tenet faced its own raid, the company tried to comfort investors by highlighting its "nationally renowned" compliance program.

"We have a compliance program that's recognized throughout our industry," boasted then-CEO Jeffrey Barbakow, who would later leave the company in disgrace. "We pride ourselves at Tenet on our high ethical standards and the way in which we conduct our business. It is part of who we are."