Facing heightened Congressional scrutiny after federal agents raided its corporate headquarters last week, managed-care provider WellCare Health Plans is turning to a defensive political operation it has assembled in recent months.
The company has stepped up methodical political giving to key Senators this year, campaign finance records show, and built an outside team of lawyers and lobbyists with experience beating back Congressional probes.
But whether that firepower can stop the company’s slide remains uncertain.
The Tampa, Fla.-based company saw its stock tumble 73 percent after more than 200 agents from the FBI and other federal and state agencies swarmed its campus Wednesday morning. While authorities declined to comment on the probe, WellCare already has faced questions this year from lawmakers about its predatory marketing practices.
It pledged before a Senate panel in May to clean up its act, but an audit released earlier this month by the Centers for Medicare & Medicaid Services showed the company was cited in August for violating eight provisions of its Medicare contract.
And as the search last week underlined, on Capitol Hill, its headaches may be just beginning. The raid “further focuses our interest on this issue,” said an aide to Senate Aging Chairman Herb Kohl (D-Wis.), whose May hearing on providers’ marketing practices prompted them to suspend those activities until they could implement new compliance standards.
At that hearing, a WellCare executive “said what the company intended to do to clean up their practices, but it doesn’t appear they’ve followed through with that,” the aide said.
Rep. Bart Stupak (D-Mich.), who as chairman of the House Energy and Commerce Subcommittee on Oversight and Investigations convened a June hearing into private Medicare providers, said he would “likely convene additional hearings on this issue.”
To help meet the challenge from the Hill, WellCare is counting on a team of consultants it mostly added this year.
It hired its first lobbyists at the beginning of 2006, inking a deal with Greenberg Traurig operatives, including Nancy Taylor, former health policy director of the then-Senate Labor and Human Resources Committee, and Holly Feraci, a veteran of the House Ways and Means Subcommittee on Oversight and Investigations.
Then, in late February of this year, the company brought on John Wyma, a solo consultant and former aide to Illinois Gov. Rod Blagojevich (D).
On May 1, two weeks before the Senate hearing, WellCare expanded the team again, adding Hogan & Hartson. Among eight professionals on that contract: Ty Cobb, chairman of the firm’s white collar criminal defense and investigations group; and Reid Stuntz, former minority staff director and chief counsel to Energy and Commerce Chairman John Dingell (D-Mich.) and co-chairman of the firm’s oversight and investigations working group.
Finally, June 1, less than a month before Stupak’s June 26 hearing, WellCare hired two top-ranking veteran House aides — George Crawford, former chief of staff to now- Speaker Nancy Pelosi (D-Calif.), and Tom Spulak, former general counsel of the House, both with King & Spalding.
Last week, in response to the raid, WellCare announced it had retained King & Spalding and Greenberg Traurig “to assist the company with responding to the investigation.’
Several of the consultants did not return calls for comment Friday.
WellCare’s rapid assembly of a top-flight lobbying team comes as executives of the embattled company have stepped up their campaign contributions. This year alone, they have delivered a total of more than $70,000 to five Senators, according to figures from the Center for Responsive Politics.
On Feb. 20, company officials wrote checks totaling $15,300 to Sen. George Voinovich (R-Ohio). A month later, on March 28, they contributed $11,000 to Sen. Gordon Smith (R-Ore.), the ranking member on the Aging panel. They gave Minority Leader Mitch McConnell (R-Ky.) $9,850 on April 17. Two days later, WellCare officials contributed $12,725 to Finance Chairman Max Baucus (D-Mont.), giving him an additional $4,000 on May 23.
They favored home-state Sen. Mel Martinez (R), another member of the Aging Committee, with $17,300 on May 30.
Of the company’s recent burst of political activity, WellCare spokeswoman Alex Knapp said in a statement: “We support likeminded people who share our vision and philosophy of making quality healthcare affordable for the millions of men, women and children who rely on government-sponsored healthcare programs.”
But WellCare executives are hardly political neophytes. In the spring of 2004, the company reportedly gave then-Florida House Speaker Johnnie Byrd rides home on its private jet as WellCare was backing state legislation worth millions of dollars in contracts. That year, company executives also contributed $24,000 to Byrd, records show.
At the same time, WellCare Chief Executive Todd Farha became a Pioneer for President Bush’s re-election campaign by raising $100,000. Last year, Bush named Farha to the board of the Securities Investor Protection Corp., which works to help investors recover assets from failed brokerage firms.
Farha’s support for Republican candidates hasn’t kept him from offering help to the new Congressional majority. He contributed $2,000 to Baucus’ take from WellCare executives, and, on May 18, cut a check for $15,000 to the Democratic Senatorial Campaign Committee, records show.
Robert Hayes, president of the Medicare Rights Center, which is pushing for stricter oversight of managed care companies, said the industry has shown enviable lobbying might.
“I often stand in admiration of their lobbying and political skills,” he said. “As an industry, there’s a long and successful record of the private interest winning at the expense of the public interest.”