Editor's Note: This year was a particularly absurd one for the health care industry. In light of that, we've expanded on our popular "Five Dumbest Things on Wall Street" to offer our "10 Dumbest Things in Health Care This Year." Part one examined the blunders of five big-cap names. Now, we look at the missteps of smaller companies.
1. WellCare's Silent Treatment
Silence isn't necessarily golden at tight-lipped WellCare ( WCG). When 200 government agents swarmed the health insurer's Florida headquarters this fall, investors had a few questions. The company didn't answer them, though. Instead, WellCare issued a press release mostly touting its "uninterrupted business operations" and, when pressed, followed up with a brief message from the CEO that offered much of the same -- except in audio form. Investors responded by sending WellCare's stock down 80% to a three-year low. Enter the press, which apparently has a better way with words. After clearly doing its homework, The Wall Street Journal published a convincing story based on an anonymous source who indicated that the WellCare investigation could prove narrow in scope and the potential fines modest in size. Other media outlets pounced on this new certainty by publishing their own versions of the truth. Wall Street analysts, rescued from the earlier information vacuum, eagerly chimed in with agreeable notes of their own. WellCare's stock, suddenly attractive again, has rallied with few interruptions ever since. Still, TheStreet.com did publish a few minor items that -- for WellCare's sake -- might have been better left unsaid. First and foremost, WellCare investors have placed their trust in CEO Todd Farha, a "proven" leader who previously helped run two health insurers that weathered spectacular collapses . Moreover, Farha counts his own cousin as an "independent" director who enjoys the unique privilege of serving on every major committee that the board has. And he relies on his general counsel to double as chief compliance officer and keep the company in line. But perhaps investors have nothing to fear. After all, WellCare runs a hard-core compliance operation reassuringly known as "The Trust Program." That program is designed to ensure that WellCare upholds all government laws so that FBI agents won't find any dirt when they happen to stop by for a raid. WellCare talked about that program a lot before the company suddenly went mute. These days, however, the company relies on others to put comforting words in its mouth. Dumb-O-Meter Score: 97. "We will tolerate nothing less than strict adherence to a code of conduct that appropriately educates and protects our members," WellCare CEO Todd Farha vowed just before Medicare cracked down on the company's marketing practices this summer. "I am confident that, with these new compliance enhancements, our overall compliance strategy will continue to be best-in-class."