Should seller beware?

Friday, October 31, 2003

HOUSTON - As rehab suppliers laud wheelchair manufacturers like Invacare and Pride Mobility for steering clear of business with unscrupulous dealers here, providers are asking whether manufacturers in general should play a more vigilant role when it comes to their customer’s customers.

The issue is tricky. While dealers are loathe to submit their companies to additional scrutiny or standards not mandated by law, there is a recognition that Medicare business is a special case.

“A manufacturer has to look at his bedfellows,” said Tom Coogan, vice president of Care Medical in Portland, Ore. “If the [the manufacturer] gets stuck in muddy water, their name is going to be criticized along with the fraudulent dealer.”

Manufacturers should check that new dealer customers have a physical location where they can provide service and repair, and they ensure that the new dealer is not operating out of a suite or telemarket-ing, Coogan said. If these or similar conditions are not met, Coogan believes a manufacturer should not pursue business with the new dealer.

Some manufacturers believe this kind of restraint is untenable.

“That’s impossible to do because when you sell to distributors, they control who they sell to,” said Winston Anderson, co-owner of Merits Health Products in Cape Coral, Fla. “ We have distributors, and we sell to them, and it would be against the law to say to the distributor, don’t sell to this guy and don’t sell to that guy.”

Indeed CMS Administrator Tom Scully has publicly stated that he does not hold manufacturers at all responsible for the epidemic of power wheelchair fraud that plagued Harris County, Texas.

“I don’t think the manufacturers are an issue at all,” he said in a September press conference. “If you are a manufacturer and your volume goes up, you’re probably not heartbroken because more product’s going out the door.”

Nevertheless, Medicare is precious business for most HME and rehab providers. Some manufacturers in Harris County recognized the bad light cast by the staggering rise of power wheelchair claims in Harris County and took steps to distance their business from the abusive dealers.

“I know Pride, every time they got a call, would inspect each one of these locations,” said Larry Rice, general manager of The Wheelchair Shop in Houston. “I know Invacare was doing the same.”

Invacare said its sale force stays alert to companies that don’t “smell right” and big bursts of business from new dealers.

“When something is as egregious as it was in Houston, then there comes a point when we as a manufacturer cannot say we didn’t see it and we didn’t know,” said Lou Slangen, senior vice president of sales and marketing at Invacare. “It would not reflect well on the industry if that were the approach we had taken. At the end of the day, we are in this together.”