Since home-care industry leader Olsten dove into the lucrative home infusion business by acquiring Quantum Health Resources two years ago, it has found itself in legal hot water.
Last month Olsten plunked down $4.5 million to settle a whistleblower suit against Quantum.
The suit alleged that the company overcharged Medicaid, Medicare and the Tricare health plan of the Civilian Health and Medical Program of the Uniformed Services for blood-clotting factors Quantum provided to hemophiliac patients in New York and Oklahoma from 1990 to 1997.
David Fluhrer, vice president of communications for Olsten, said Quantum had settled with the state of California regarding similar claims in October 1995.
Melville, N.Y.-based Olsten bought the home infusion company for $300 million in stock and assumed debt in June 1996.
Quantum also is under investigation by the New Mexico attorney general and the state's Health Care Anti-Fraud Task Force for alleged fraud against federally funded medical assistance programs.
Meanwhile, Olsten itself is still the target of a federal grand jury investigation into possible violations of criminal laws related to the home health companies it manages for Columbia/HCA Healthcare Corp.
Medicaid and Medicare fraud have dogged the home-care industry for years, particularly since HHS launched "Operation Restore Trust" in 1995. Last year Orlando, Fla.-based RoTech settled Medicare fraud charges for $613,000 related to its home respiratory services. In April, Hartford, Conn.-based U.S. HomeCare settled for $1.75 million with the New York state attorney over Medicaid fraud charges.
"Our company has denied all allegations of wrongdoing," said Olsten general counsel William Costantini in a prepared statement. "Nevertheless, to avoid the expense, burden and uncertainty of further legislation, the parties have mutually agreed to settle this matter."
Quantum, now a part of Olsten Health Services, is the home healthcare division's lifeline to profitability. Home infusion is one of the few home-care arenas still widely viewed as moneymakers. While Medicare reimbursements for skilled-nursing visits were slashed under the new interim payment system for home care implemented Oct. 1, 1997, home infusion and the related nursing visits continue to be reimbursed under the old system. Olsten projects that revenues from its home infusion unit will top $500 million this year, accounting for about one-third of the company's total revenues.
Signatories to the Quantum settlement agreement included the Department of Justice; HHS' inspector general's office; Tricare Management Activity, the agency that administers Tricare; the Secretary of Defense; the attorneys general of New York and Oklahoma; and the whistleblower.
Of the $4.5 million, $2.9 million went to the U.S. government, $927,000 went to New York state, and $71,000 went to Oklahoma. The whistleblower received $648,000, or 18.5% of the federal share of the settlement. Under the federal False Claims Act, a whistleblower is entitled to 15% to 25% of the settlement.
The case is under seal, and no details about the whistleblower were available.