Liberty Medical parent to pay $35 million to end probe

November 8, 2004 PORT ST. LUCIE, Fla. - The parent company of diabetes-test provider Liberty Medical Supply and respiratory provider Liberty Home Pharmacy will pay $35 million to end a five-year federal investigation of its billing practices. The settlement was reached in early November to end a U.S. Department of Justice investigation of the Port St. Lucie, Fla.-based Liberty on allegations of Medicare fraud. Under the agreement, however, Liberty does not admit to any wrongdoing and the U.S. Attorney's Office will not bring criminal charges against the company. "It is important for the company and for our investors to put this matter behind us, so that we can focus all our energies on serving our patients and continuing to grow and develop our business," said PolyMedica chief executive Patrick Ryan in a company statement. The federal government began investigating PolyMedica in 1999, and in August 2001 dozens of FBI agents, including 19 computer specialists, raided four Florida offices of Liberty Medical Supply and Liberty Home Pharmacy, and the homes of two employees. At the time, ex-employees said the company shipped diabetes test strips to people who didn't order them and did not reimburse Medicare for returned packages. This year, PolyMedica finished its own review of its billing and said it owed Medicare $5.7 million for claims filed between 1997 and 2003. The company had set aside the amount for payment. "The Medicare rules require near-perfection, and we did not meet those standards," said Liberty President Stephen Farrell in a Palm Beach Post article.  "We wanted to move past this, and the government wanted to move past this … It was an appropriate step to make a payment." Liberty Medical also paid nearly $1 million in backlogged refunds to the DMERCs in March 2001 to address issues that arose from the DOJ and FBI investigation of the company. Following news of the settlement, PolyMedica posted second quarter results. Its $7.1 million loss this quarter, down from a $12.1 million gain the same quarter a year ago, are attributed primarily to the settlement, said company officials.