Rehab dealer settles dispute with AG

Friday, October 31, 2003

ROCHESTER, N.Y. - Monroe Wheelchair recently saw the end of a two-year nightmare that had the New York attorney general’s office investigating every aspect of one of the state’s largest rehab dealers.

Monroe agreed to pay a $400,000 settlement after an audit conducted by the state’s Medicaid Fraud Control Unit revealed the company had failed to take advantage of manufacturer discounts between 1995 and 1999, thus over billing Medicaid for wheelchairs supplied to program recipients.

“Our settlement contract with the attorney general’s office resolves a longstanding disagreement between Monroe Wheelchair and the state regarding the interpretation of some vague and complex regulations,” said Monroe’s president, Doug Westerdahl, in a statement.

The dispute was over the legal definition of “acquisition price” during the period of 1995 to1999. Westerdahl said the definition was simply “acquisition price,” so the company was justified in billing Medicaid for exactly what it paid the manufacturer.

New York state officials, however, say the company over billed Medicaid when it did not take advantage of manufacturer discounts and rebates, which should have been considered when determining acquisition cost.

Since New York state reimbursed rehab equipment at cost plus 50%, Monroe’s management paid the invoices and billed Medicaid at the higher amount in order to get a higher percentage back from the state.

“It wasn’t even a mistake. It was an incredible difference in opinion as to what was legal and what isn’t,” Westerdahl said. “Not only did we absolutely believe that we are totally in compliance with the state’s definition of acquisition cost, we thought it was justified because we weren’t getting paid in time to take advantage of those discounts either.”

Jerry Solomon, director of New York’s Medicaid Fraud Unit, said this rationale “just doesn’t fly.” He said the law always included rebates and discounts in the definition of acquisition price.

Despite the difference in opinion, Monroe agreed to settle after several months of negotiations.

“The lack of resolution was preventing us from expanding the scope of products and services we wish to provide to valued customers,” Westerdahl said in the prepared statement.

Westerdahl said Monroe is doing well after the lengthy investigation, and he is proud of the way the company handled itself.

“I am extremely proud of that fact that during investigation we were under incredible scrutiny for every other aspect of our business … and they did not find one single thing in the hundreds of files that they audited,” said Westerdahl. “It’s proof that our compliance program works.”