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The Wall Street Journal Interactive Edition -- July 9, 1998
Apria Receives Subpoenas
Tied to Its Medicare Billing
By RHONDA L. RUNDLE
Staff Reporter of THE WALL STREET JOURNAL
Apria Healthcare Group Inc., a struggling home-health company, said it received six subpoenas from the U.S. Attorney's office in Sacramento, Calif., requesting documents related to billing for Medicare and other federally funded programs.
"The first we became aware of the investigation was when we received the subpoenas on June 30," said spokeswoman Sheree L. Aronson. "We don't know what triggered them, and we don't know the scope of the investigation. We don't have any reason to believe the company has done anything improper."
Officials at the U.S. Attorney's office in Sacramento and the Justice Department in Washington declined to comment.
In New York Stock Exchange composite trading Wednesday, Apria shares plunged 81.25 cents, or 11.7%, to $6.125.
The subpoenas request documents dating back three years that are located at the company's branch offices in San Diego and Sacramento, as well as its corporate headquarters in Costa Mesa, Calif., and an office in Canonsburg, Pa., that oversees internal compliance with government rules and regulations.
Apria hasn't had any contact with government attorneys so far, but hopes to meet with them in the next 30 days "to get clarity on the language in the subpoenas," Ms. Aronson said. The deadlines for submitting information are staggered through September, and an accompanying letter suggests those dates may be extended if needed, she said.
"We want to get to the bottom of any concerns the government may have as quickly as possible," said Ralph V. Whitworth, Apria's chairman. There haven't been any charges filed or allegations of wrongdoing, the company stressed.
Apria said it maintains "high standards of ethical and legal conduct, and has a strong track record of insisting on government regulatory compliance." The company's compliance program includes regular internal audits, written policy guidelines, employee education and a toll-free number for anonymous complaints.
But Apria's record isn't spotless. In February 1997, Apria agreed to pay $1.7 million to the U.S. government to settle a suit brought against it by a former employee of one of its predecessor companies. A former branch manager in Atlanta had alleged that the health-care provider defrauded Medicare by entering into phony consulting contracts in exchange for referrals. Apria settled the suit without admitting any wrongdoing.
The probe comes at a difficult time for Apria, which recently installed a new chief executive officer, who is trying to restore profitability. The company said that complying with the subpoenas will be a distraction, but that the burden will fall on Apria lawyers and auditors more than on its senior managers.
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