Former employee alleges Rotech engaged in scam to get VA business

Saturday, May 31, 2003

ORLANDO, Fla. — A former Rotech employee is suing Rotech Healthcare for thousands of dollars, alleging corporate officials used company money and employees to set up independent HMEs (“set asides”) in a scheme to win VA businesses.

Former Rotech Regional Manager Mike Rogers filed his suit in the United States District Court Eastern District of Texas Texarkana Division last October, but it is just now getting underway, said Kurt Truelove, Rogers’ attorney.

In his lawsuit, Rogers alleges the following: Officers and other high level employees would use money and capital provided by Rotech, and form small businesses that were owned by and operated by Rotech personnel. Rotech called these small businesses “set asides.” With numerous set asides that were owned and operated by Rotech officers and employees, Rotech was able to submit bids for government contracts and show which small business would do the required subcontracting. The small businesses used were the set asides.

Rotech officials did not return calls for this story.

The lawsuit alleges that former CEO Steve Linehan and former COO Scott Novell assured Rogers that creating set asides “was legal and approved by Rotech.”

Rogers claims Rotech management recruited him to run a “set aside” — RO2AM in Shreveport, La. — in July 2001. They also required him to quit his regional manager job but promised to rehire him if RO2AM’s bid to garner VA business failed, the documents state.

In the end, Rotech never landed the VA contract, and then abandoned Rogers and left him holding the debt related to the failed RO2AM venture, according to court documents.

Rogers is suing Rotech for fraud, claiming Rotech officials lied when they told him the VA contract was a near certainty and that he’d get his job back if the venture failed, said Rogers’ attorney, Kurt Truelove. HME