WellCare Health Plans Inc., Tampa, Fla., has settled a class-action lawsuit led by four public pension plans for $200 million, pending court approval.
The four funds are the $12 billion Louisiana Teachers' Retirement System, $9.2 billion Chicago Public School Teachers' Pension & Retirement Fund, $3 billion Chicago Policemen's Annuity and Benefit Fund, and the $10.6 billion New Mexico Public Employees Retirement Association. The $14.1 billion New Mexico State Investment Council also was a lead plaintiff.
The settlement will be paid with $87.5 million in cash and $112.5 million in freely tradable, registration-exempt bonds with a maturity date of Dec. 31, 2016, and a fixed coupon of 6%, according to an SEC filing by WellCare and a news release by New Mexico Attorney General Gary K. King, whose office administers lawsuits for the New Mexico State Investment Council and the New Mexico Public Employees Retirement Association.
A class of shareholders led by the four funds and investment council sued WellCare in U.S. District Court for the Middle District of Florida for the loss of the value of their stock after the FBI and the Florida attorney general's office raided WellCare's Tampa headquarters on suspicion of Medicaid fraud. In June, WellCare settled with the U.S. Justice Department and other federal agencies for $137.5 million.
In the most recent settlement, WellCare also agreed to pay another $25 million in cash if it gets acquired in the next three years or otherwise experiences a change in control at a share price of $30 or more after adjustments for dilution or stock splits.
The settlement is subject to approval by the United States District Court.
