The Scooter Store facing series of problems

February 24, 2013 1:22:30 PM PST
Residents in a Central Texas county are wondering about the future of one of its largest employers after the troubled power wheelchair and scooter company was raided this month as part of an investigation into alleged fraud.

The San Antonio Express-News reported Sunday that officials with The Scooter Store, known for its ubiquitous television ads, have denied wrongdoing and have defended their business practices.

Earlier this month, the New Braunfels-based company cut 150 jobs, blaming pending government changes in claims processing and reimbursement. The new layoffs came on the heels of 220 job cuts in September, citing a drop in Medicare reimbursements.

And in December, two U.S. senators questioned why The Scooter Store had received as much as $87.7 million in Medicare overpayments.

The company has declined to comment since last week's raid by agents from the FBI, the U.S Department of Health and Human Services' Office of Inspector General and the Texas attorney general's office. But in a statement released earlier this month, the 22-year-old company said it has provided "freedom and independence to more people with limited mobility than any company in the nation."

It has served more than 500,000 customers, according to the company statement.

The company employs about 1,200 people at its headquarters -- located about 30 miles northeast of San Antonio -- and 1,800 overall.

New Braunfels City Manager Michael E. Morrison said he's now worried about the company's future.

"What I'm most concerned about are the folks who are employed," Morrison said. "These folks have families, they have obligations. I'm pretty sure it's safe to say they don't know what their future is."

New Braunfels earlier this month demanded The Scooter Store return nearly $1.4 million of $3.5 million in economic incentives it was awarded in 2009 for promising to create 500 jobs.

The Scooter Store's problems go back about a decade.

In 2003, the FBI visited with a couple-dozen employees in their homes. The newspaper said authorities were investigating whether the company had defrauded Medicare. The U.S Justice Department sued the company in 2005 for allegedly making false Medicare claims and defrauding the government.

And a recent report by the U.S. Department of Health and Human Services' Office of Inspector General found 80 percent of claims for power wheelchairs did not meet Medicare coverage requirements and should not have been paid for by Medicare.

The company settled the lawsuit in 2007, agreeing to pay the government $4 million and forgo $13 million in Medicare payments.

Part of the settlement required The Scooter Store to report any Medicare overpayments as part of a five-year "corporate integrity agreement."

An independent audit last year found the company was overpaid between $46.8 million and $87.7 million combined in the third and fourth years of the agreement. The Scooter Store agreed to repay $19.5 million under a five-year payment plan.

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