Continuing an emerging pattern in the post-acute-care market, RoTech Oxygen and Medical Equipment settled an ongoing investigation of its Medicare billing practices before entering a major sales agreement.
RoTech Oxygen is a unit of Orlando, Fla.-based RoTech Medical Corp., which last week agreed to be acquired by Integrated Health Services for $915 million.
Under a settlement reached with HHS' inspector general's office in May, RoTech Oxygen agree to pay a $612,500 fine to resolve allegations that it submitted false claims to Medicare for payment. MODERN HEALTHCARE*obtained a copy of the settlement last week under the federal Freedom of Information Act.
RoTech denied the government's allegations and, under the settlement, admits to no violation of federal law.
An attorney for RoTech maintained the money wasn't a fine, but rather a repayment of Medicare money. "It's not a penalty," attorney Scott Novell said.
"For financial, tax and just overall cost benefit, we decided to settle it," Novell said.
The government's investigation of RoTech covered April 1987 through December 1989. The scope included Medicare billing by RoTech or its affiliated or sister companies for home medical equipment and medical services.
The practice of clearing up any billing investigations before entering a major sales agreement is becoming familiar in the post-acute market.
In June 1995, for example, Caremark International, Northbrook, Ill., agreed to pay $161 million to settle a variety of Medicare and Medicaid fraud charges stemming from the operations of its home infusion therapy business. Less than a year later, the company agreed to be acquired by MedPartners of Birmingham, Ala.
And in February of this year, Apria, a Costa Mesa, Calif.-based home-care company, agreed to a $1.7 million settlement of similar charges. Four months later, Apria put up a for-sale sign (June 30, p. 14).