U.S. HomeCare Corp. paid $1.75 million last month to settle Medicaid fraud charges brought by the New York state attorney general's office.
The settlement contributed to a loss of $2.6 million, or 23 cents per share, in the fourth quarter ended Dec. 31, 1997. That compares with net income of $455,000, or 3 cents per share, in the year-ago period. Revenues for the fourth quarter of 1997 dropped 11% to $12.7 million.
The investigation into Hartford, Conn.-based U.S. HomeCare began in November as part of a statewide probe of home-care firms. Although U.S. HomeCare's loss was reported in the fourth quarter of 1997, the company will pay off the fine in undisclosed monthly installments through January 2001.
U.S. HomeCare said it settled to expedite the investigation, which coincided with merger discussions with King of Prussia, Pa.-based Home Health Corporation of America. But the deal broke down in February (Feb. 23, p. 53). Executives on both sides said the companies simply weren't ready to merge, but they didn't rule out a future deal.
"We could have taken a different approach, but we needed to get the investigation behind us," U.S. HomeCare Chief Executive Officer Jay Huffard said. "We paid a big premium, but we are in good standing with the state and are enthusiastic about our future."
For the year, U.S. HomeCare reported a net loss of $1.6 million, or 22 cents per share, compared with a net loss of $23.8 million, or $2.76 per share, in the previous year. Revenues for 1997 dropped 4% to $52.6 million.
The company provides services in Connecticut, New York and Pennsylvania.
