Apria to Pay $20.5 Million to Settle Suit

Apria Healthcare Group Inc. said Tuesday it has agreed to pay $20.5 million to settle a shareholder lawsuit filed before the health-care company was created in a merger last year.

The suit claimed that the former Abbey Healthcare Group Inc., which merged with Homedco Group Inc. to form Apria, made misleading statements when acquiring another health-care company in 1993.

The federal class-action suit said Abbey and certain officials exaggerated the financial condition of Torrance-based Total Pharmaceutical Care Inc., which Abbey acquired in 1993, as well as the impact on Abbey. The suit also named certain officers and directors of Total.

The suit sought damages for investors who purchased Abbey stock from Sept. 7, 1993, through June 16, 1994.

Apria said insurers will cover $16.5 million of the settlement, with the company paying the balance. The company, which said it has been attempting to negotiate a settlement for months, has already set aside reserves to cover its portion.

Apria will take a $3-million charge in the fourth quarter, however, for related legal expenses.

A spokeswoman said it made the settlement both on behalf of the company and the individual defendants. None of the defendants has admitted any wrongdoing, she said.