Federal authorities ended their three-year investigation of T2 Medical last week after the now-merged home infusion company agreed to pay a $500,000 penalty and discontinue its controversial business arrangements with physicians.
However, the other alternate-site company named in the 1992 federal probe-Radiation Care-remains under investigation. HHS officials told MODERN HEALTHCARE they have not settled with Radiation Care.
Radiation Care, which recently said it was considering selling a portion of its assets to AMA Financial Corp., declined comment. Atlanta-based Radiation Care provides outpatient radiation therapy and diagnostic services.
In June 1992, Radiation Care and T2, which is now part of Coram Healthcare Corp., issued simultaneous statements confirming that a federal grand jury in Atlanta-acting on the request of HHS-had requested documents from them. Both companies were chaired by Thomas Haire at the time. At issue was whether the two companies violated the anti-kickback provisions of the 1977 Medicare and Medicaid fraud and abuse statutes.
Meanwhile, T2 last week said it will pay federal authorities $500,000 to settle its involvement in the federal probe. More importantly, the company agreed to radically restructure its controversial business arrangements with physicians.
Specifically, T2 is required to offer physicians unrestricted stock; stop managing or providing services to facilities owned by physicians, with certain exceptions; ensure that stock sold to physicians is based on terms equally available to the public; cease any co-ownership relationships with physicians specializing in home infusion; and prohibit its managed facilities from submitting claims to Medicare or Medicaid.
The company, however, is not expelled from the Medicare or Medicaid program, nor is the settlement to be considered an admission of guilt or liability, officials said.
Surprisingly, HHS officials and T2 hailed the settlement as a victory.
In a press release, federal officials said the settlement with T2 "ensures that future practices of T2 will not violate the law, and that physicians will be informed about their legal and ethical obligations to Medicare and Medi-caid beneficiaries."
However, in a letter issued to shareholders, T2 said it was "pleased to announce the settlement of the U.S. government's criminal investigation."
In July, T2 merged with Curaflex Healthcare, HealthInfusion and Medisys to form Coram Healthcare Corp., the nation's second-largest alternate-site provider.
In its second-quarter report, Coram said it had set aside $17.2 million in reserves for possible shareholder settlements involving T2.
The Alpharetta, Ga.-based home infusion company is the subject of a class-action shareholder lawsuit and ongoing investigation by the Securities and Exchange Commission.