Grand Jury Starts Investigation of Apria Healthcare

A federal grand jury has launched a criminal investigation into allegations that Apria Healthcare Group Inc. gave kickbacks to medical providers in exchange for receiving patient referrals, the home health-care company disclosed Thursday.

The Costa Mesa company said the grand jury is looking into allegations raised in a whistle-blower lawsuit filed last year in an Atlanta federal court. The suit by a former company branch manager, Mark Parker, alleges that Apria improperly gave doctors free benefits, such as lung-function testing, and improperly obtained doctors’ certifications that products such as oxygen and specialty beds were medically necessary for patients.

The suit focuses on alleged kickbacks to an Atlanta medical group and a hospital in El Paso, Texas, but court documents also allude to possible improprieties across the country.

In the filing Thursday, Apria said it cooperated with the Justice Department investigation into Parker’s charges prior to being served by the whistle-blower lawsuit last May 31. On July 10, the Justice Department intervened in the case, filing an amended complaint in which it joined Parker in his allegations about illegal kickbacks.

The company said it intends to defend itself vigorously against the allegations. The filing also disclosed, however, that Apria is involved in preliminary settlement talks with the Justice Department.

Though sources say the company expects to settle soon, its general counsel, Robert S. Holcombe, said, “You know how that type of discussion works. Sometimes you can think you might be close and you’re not.

“There can’t be any assurance as to how these discussions will come out or whether they will result in a settlement.”

Apria, which supplies oxygen, infusion and other services to patients at home, is the largest operator in an industry undergoing intense scrutiny by the government for possible violations involving tax-supported health-care plans. Laws forbid medical providers from receiving inducements in exchange for referring patients on Medicare, Medicaid or other federal insurance programs.

Last month, Holcombe confirmed that the Justice Department had investigated possible civil and criminal violations, but said he wasn’t aware if a grand jury had been impaneled.

Apria disclosed the grand jury investigation as part of a quarterly financial report filed with the Securities and Exchange Commission. The government could seek damages, fines of up to $10,000 for each false claim, and other remedies, according to the documents. The company didn’t specify where the grand jury is seated.