G. Robert O'Brien's decision to leave embattled Empire Blue Cross and Blue Shield to run U.S. HomeCare Corp. won't remove him from future controversy. The Hartsdale, N.Y.-based home-care company is as problem-plagued, if not more so, than his former employer.
For example, U.S. HomeCare announced last week that it has agreed in principle to pay $3 million to shareholders to settle a class-action lawsuit filed against the company in July 1993. The complaint, filed in U.S. District Court in New York, accused former U.S. HomeCare President and Chief Executive Officer W. Edward Massey and three other company officials of engaging in securities fraud.
However, U.S. HomeCare officials said the settlement is not to be considered an admission of any guilt or liability on the part of the company.
Second, the U.S. Justice Department, HHS' inspector general's office and the U.S. Attorney's Office in southern Florida are investigating the company to determine if its southern Florida and Pennsylvania branch offices falsely billed Medicare for services in 1993.
The investigation, which began in March, stems from a "whistle blower" lawsuit filed by several U.S. HomeCare employees who had been fired. A company spokesman confirmed the ongoing investigation but wouldn't say when the employees filed the suit. Initial information on the investigation was detailed in the company's second-quarter report filed with the Securities and Exchange Commission Aug. 16.
Finally, the decision to remove Mr. Massey as president and CEO of U.S. HomeCare and replace him with Mr. O'Brien came after a six-month internal assessment of the company by New York investment banking firm Donaldson, Lufkin & Jenrette.
In its second-quarter report, U.S. HomeCare said its board of directors determined that "the best means to achieve shareholder value at the present time is through an executive restructuring, a specific plan to raise additional equity capital and a refocus on the company's core markets..."
Ironically, it was Mr. Massey who hired the investment banking firm in February to assist the financially struggling company in finding a buyer or merger partner (Feb. 21, p. 3).