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Apria Is the Latest Target in Fraud Probe, Firm Says

July 09, 1998|BARBARA MARSH | TIMES STAFF WRITER

Struggling Apria Healthcare Group Inc. said Wednesday that federal prosecutors in Sacramento have demanded documents on the company's billing practices over the last three years.

Apria, the nation's largest provider of home health-care services, said it received six subpoenas from the U.S. attorney's office, which is seeking documents from the company's corporate headquarters in Costa Mesa as well as offices in San Diego, Sacramento and Canonsburg, Pa.

Apria becomes the latest health-care company to be targeted in the federal government's continuing hunt for possible fraud in publicly funded health plans. The government inquiry means another headache for a company already in turmoil.

"We weren't thrilled to get the subpoena," said Robert Holcombe, senior vice president and general counsel. "It's an administrative burden."

The government is investigating Apria's billing practices with Medicare, Medicaid and other federally funded health-care programs, which last year accounted for $460 million, or 39% of the company's total revenue, Holcombe said.

Investigators use subpoenas to gather evidence for possible civil or criminal proceedings and could be pursuing either in this case, Holcombe said.

Holcombe said the company will comply with the federal request. "We have all those documents. We feel good about what they say," he said, adding, "At the moment, we don't have any reason to be concerned about any major problem."

The investigation is a joint effort by the Health and Human Services Department and the Justice Department, said a spokesperson for HHS' investigator general's office. Justice Department officials wouldn't comment.

After its announcement Wednesday, Apria's stock dropped to a 52-week low of $5.63 a share in heavy trading on the New York Stock Exchange, then rallied somewhat to close at $6.13, down 81 cents for the day. More than 1 million shares were traded, compared with a daily average of 298,363 for the last three months.

In the last year, the company has been beset by turnover in the boardroom and executive suite and big financial losses.

It posted an unexpectedly deep loss of $272.6 million, or $5.30 a share, last year, contrasted with income of $33.3 million, or 64 cents, the prior year. Revenue remained flat at $1.18 billion.

Meanwhile, the government is pressing ahead with other inquiries, including a nationwide probe into the billing practices of hospital giant Columbia/HCA Healthcare Corp.

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