Home Health & Hospice Week

Despite a $17 million Medicare fraud settlement last year, durable medical equipment supplier Rotech Healthcare Inc. still has the feds on its trail.

Federal Bureau of Investigations agents April 30 executed search warrants at the company's Orlando, FL headquarters and at four other facilities in three states. One of the facilities was Marshall Home Health Care in Texarkana, TX, reports the Texarkana Gazette.

In addition, agents served the company, which was spun off from Integrated Health Services out of bankruptcy, with a grand jury subpoena on behalf of the U.S. attorney's office in Chicago.

Rotech says it doesn't know what the investigation is about, and the feds at this point aren't saying. The company noted in a May 1 statement, however, that it has previously received informal information requests from the Securities and Exchange Commission relating to previously disclosed problems with its accounting of certain Veterans Administration contracts.

Rotech says an independent contractor bilked it for bulk supplies for the VA (see Eli's HCW, Vol. XI, No. 24, p. 191).

Last September, the company restated its earnings for all of 1999, 2000 and 2001, and the first quarter of 2002 due to the VA problems (see Eli's HCW, Vol. XI, No. 33, p. 270).

And last year's fraud settlement for the False Claims Act charge, finalized in February as the company emerged from bankruptcy, included allegations that Rotech forged documents used to bill the government for oxygen cylinders, oxygen concentrators and nebulizers.

Rotech's stock price fell from $15.65 per share to $13.30 after the announcement, but had climbed back to $14.75 at press time. Before the VA scandal last year, the stock was trading at more than $30.