The Scooter Store settles fraud allegations
NEW BRAUNFELS, Texas - The Scooter Store has agreed to pay the government $4 million to settle fraud allegations, ending a nearly four-year battle with the U.S. Department of Justice, the two entities announced May 11. The Scooter Store, one of the largest providers of power mobility devices, has also agreed to drop its lawsuit seeking reimbursement for a batch of claims denied by Medicare due to lack of medical necessity.
The Scooter Store denies any wrongdoing.
"There's nothing that I would have liked better than my day in court, because, inevitably, we would have won," said Doug Harrison, founder and CEO of The Scooter Store. "However, (the DOJ) can clearly outspend us and outlast us. We decided it was in our best interest to settle and move forward."
The settlement resolves a lawsuit the DOJ filed in 2005. The government's allegations against The Scooter Store included providing "expensive power wheelchairs that (beneficiaries) did not want, need and/or could not use" and charging Medicare for unnecessary accessories, according to a DOJ release.
Additionally, the settlement resolves a lawsuit the Scooter Store filed in 2003. The company's allegations against Medicare included unfairly denying claims with valid certificates of medical necessity (CMNs). Medicare replaced CMNs with physician prescriptions and supporting documentation in 2005.
The value of the disputed claims, according to the DOJ release: about $13 million.
Also per the settlement, Harrison must forgo collecting dividends for his shares in the company for the rest of 2007, and the company must operate for the next five years under a corporate integrity agreement with the Office of the Inspector General (OIG).
The Scooter Store views the settlement as a "moral victory" for the company. If the DOJ had a leg to stand on, it wouldn't have settled, officials said.
“Unfortunately, the unstated policy of this government is to limit costs to the Medicare program and do whatever it can to curtail access to power wheelchairs and scooters,” said Mark Leita, director of public affairs for The Scooter Store. “Our company got caught in the middle. We did nothing wrong.”
Industry sources characterized the $4-million settlement as "a drop in the bucket" for a provider like The Scooter Store.
"The real punishment has been what they've gone through," said industry attorney Ann Berriman.
Due to the lawsuit, The Scooter Store has reduced both its workforce and revenues by one-third, Harrison said. The company has also spent millions of dollars in legal fees.
Numerous providers sympathized with The Scooter Store.
"It scares me, because a lot of us are working hard and honestly," said William Rowell, director of rehab services for Shuman Healthcare in Waycross, Ga. "If they want to find something wrong, they'll find it, especially when you're doing that much volume."
Other providers, while they sympathized with what The Scooter Store has gone through, believe the company may have gotten what it deserved.
"It's vitally important for all of us to have compliance programs and follow the rules to the T, no matter how illogical they may seem," said one provider. "The rules are the rules, and if they're so burdensome that you can't follow them, then there are trade groups and others who can help affect change."
Regardless of the camp you sit in, there's a lesson for providers in The Scooter Store's pain, Berriman said: "Some providers are in the habit of thinking, 'We're going to get the minimum documentation, and then if we're asked for more or if we have trouble getting a claim paid, we'll get additional documentation. We can't do it every time; it's not cost effective.' But that's not what the government wants. The industry has been making a business decision that's contrary to government intent. Now, whether the government's intent is appropriate or not is questionable in my mind."