UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of
Report (Date of earliest event reported): August 25, 2008
WELLCARE
HEALTH PLANS, INC.
(Exact
name of registrant as specified in its charter)
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Delaware
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001-32209
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47-0937650
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(State
or other jurisdiction
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(Commission
File Number)
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(IRS
Employer
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of
incorporation)
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Identification
No.)
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8725
Henderson Road, Renaissance One
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Tampa,
Florida
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33634
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code:
(813) 290-6200
Not
Applicable
(Former
name or former address, if changed since last report.)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
1.01 Entry into a Material Definitive Agreement.
On August
25, 2008, three wholly owned subsidiaries (the “Subsidiaries”) of WellCare
Health Plans, Inc. (the “Company”) each entered into a
separate Memorandum of Understanding (the “MOUs”) with the Ohio
Department of Insurance (the “Ohio Department”). The
Subsidiaries collectively provide the following services in Ohio: (1) coverage
to Medicaid Covered Families and Children members and Medicare Advantage Health
Maintenance Organization beneficiaries, (2) Medicare
Part D drug coverage, and (3) Medicare
Private Fee for Services and Medicare Preferred Provider Organization
coverage. These services are provided by the Subsidiaries pursuant to
various contracts between the Subsidiaries and certain government agencies, as
described below.
Each of
the Subsidiaries was required to file on or before June 1, 2008 an annual
audited financial report for the year ended December 31, 2007 (the “2007 Ohio Annual Financials”)
with the Superintendent of Insurance in Ohio (the “Superintendent”). As
previously disclosed and as discussed below, the Company announced on July 21,
2008 that the Company’s previously issued audited consolidated financial
statements for the years ended December 31, 2004, 2005 and 2006, and its
previously issued unaudited condensed consolidated financial statements for the
three months ended March 31 and June 30, 2007, need to be restated (the “Restatement”). Since
announcing the Restatement, the Company has been preparing its various financial
statement requirements, including working with the Subsidiaries to prepare the
2007 Ohio Annual Financials.
Pursuant
to the MOUs, each Subsidiary has agreed that if, as of September 15, 2008, it
(i) has not filed the 2007 Ohio Annual Financials, (ii) has a National
Association of Insurance Commissioners (“NAIC”) risk based capital
ratio below 300%, 200% and 250% (depending on the applicable MOU), or (iii) is
in violation of the Ohio Administrative Code §3901-3-04 (the section of the Ohio
Administrative Code that sets forth standards which the Superintendent may use
for identifying insurers whose condition is such as to render the continuance of
their business hazardous to the public or to holders of their policies or
certificates of insurance), the applicable Subsidiary, effective September 15,
2008, will take all actions within its control to not solicit, issue, or
otherwise enroll any new members, or assume any new risk in Ohio. To
the extent a Subsidiary has met the above-described conditions by September 15,
2008, the MOU will terminate on the date that such subsidiary files its 2007
Ohio Annual Financials with the Superintendent. If a Subsidiary is
unable to meet the above-described conditions by September 15, 2008 and is
required to cease writing new business in Ohio pursuant to the MOU, it may
request to resume writing new business in Ohio after it has come into compliance
with the terms of the MOU. Upon such a request, the Ohio Department
has agreed not to withhold unreasonably its approval for such Subsidiary to
resume writing new business in Ohio.
As noted
above, the Company and each of the Subsidiaries are preparing the 2007 Ohio
Annual Financials, but the Company cannot provide any assurances that each
Subsidiary will meet the above-described MOU conditions by September 15,
2008.
The MOUs
relate to services being provided by the Subsidiaries pursuant to the following
contracts: (i) Ohio Medical Assistance Provider Agreement for Managed Care Plans
(Covered Families and Children) between the Ohio Department of Job and Family
Services and WellCare of Ohio, Inc., as amended, attached as Exhibit 10.17 to
the Company’s Form 10-Q filed with the U.S. Securities and Exchange Commission
(the “SEC”) on November
3, 2006, (ii) Contract (H0117) with Eligible Medicare Advantage Organization
Pursuant to Sections 1851 through 1859 of the Social Security Act for the
Operation of a Medicare Advantage Coordinated Care Plan(s) between Centers for
Medicare & Medicaid Services and WellCare of Ohio, Inc., as amended, filed
as Exhibit 10.5 to the Company’s Form 8-K filed with the SEC on November 9,
2007, (iii) Contract (H0967) with Eligible Medicare Advantage Organization
Pursuant to Sections 1851 through 1859 of the Social Security Act for the
Operation of a Medicare Advantage Coordinated
Care Plan(s) between Centers for Medicare & Medicaid Services and WellCare
Health Insurance of Illinois, Inc., as amended, filed as Exhibit 10.1 to the
Company’s Form 8-K filed with the SEC on November 9, 2007, (iv) Contract (H4577)
with Eligible Medicare Advantage Organization Pursuant to Sections 1851 through
1859 of the Social Security Act for the Operation of a Medicare Advantage
Private Fee-For-Service Plan(s) between Centers for Medicare & Medicaid
Services and WellCare Health Insurance of Illinois, Inc., as amended, filed as
Exhibit 10.16 to the Company’s Form 10-Q filed with the SEC on November 3, 2006,
and (v) Contract with Approved Entity Pursuant to Sections 1860D-1 through
1860D-42 of the Social Security Act for the Operation of a Voluntary Medicare
Prescription Drug Plan between Centers for Medicare & Medicaid Services and
WellCare Prescription Insurance, Inc., as amended, filed as Exhibit 10.3 to the
Company’s Form 8-K filed with the SEC on November 2,
2005.
This
Current Report on Form 8-K contains forward-looking statements within the safe
harbor provisions of the Private Securities Litigation Report Act of
1995. All statements other than those that are purely historical in
nature are considered to be forward-looking statements. Words such as “expect,”
“anticipate,” “believe,” “estimate,” “intend,” “plan,” “potential” and similar
expressions also identify forward-looking statements.
Investors
should not rely on forward-looking statements because they are subject to a
variety of risks, uncertainties and other factors, many of which are outside of
the Company’s control, that could cause actual results to differ materially from
the Company’s expectations. These include, but are not limited to,
the possibility that federal and state claims arising from the investigations
may exceed the amounts held in the escrow account, including, without
limitation, any additional interest, fines, penalties or other assessments that
may be imposed against the Company. These risks also include the
possibility that other areas of the investigations may directly or indirectly
lead to material adverse operating restrictions or disqualifications or material
adverse impacts on the Company’s previously issued financial
statements. If the investigations result in criminal or other
sanctions against the Company for health care related violations or otherwise,
it could be disqualified from doing business in one or more jurisdictions under
various statutes, regulations and contracts. Any such restrictions,
disqualifications and/or sanctions could have a material adverse effect on the
Company’s business, results of operations, financial condition or cash flows.
All forward-looking statements attributable to the Company are expressly
qualified in their entirety by the cautionary statements in this
paragraph.
For a
discussion of a variety of risk factors affecting the Company’s business and
prospects, see “Item 1A — Risk Factors” in our Annual Report on Form 10-K
for the year ended December 31, 2006 (the “2006 10-K”), as supplemented
by the reports the Company has filed since the 2006 10-K (including the
Company’s Current Report on Form 8-K filed on July 21, 2008).
SIGNATURES
Pursuant to the requirements of the
Securities Exchange Act of 1934, as amended, the registrant has duly caused this
report to be signed on its behalf by the undersigned hereunto duly
authorized.
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Date: August
28, 2008
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WELLCARE
HEALTH PLANS, INC.
/s/ Heath
Schiesser
Heath
Schiesser
President
and Chief Executive Officer
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