U.S. Accuses O.C. Firm of Medicare Fraud
The Justice Department has accused Home Americair Inc. of Medicare fraud in providing oxygen to home-based patients.
The agency, which recently joined a whistle-blower’s lawsuit filed in Los Angeles federal court, contends the company used unlawful billing practices in seeking Medicare refunds and falsified patients’ test results.
For the record:
12:00 a.m. July 30, 1997 For the Record
Los Angeles Times Wednesday July 30, 1997 Orange County Edition Business Part D Page 6 Financial Desk 2 inches; 41 words Type of Material: Correction
Franchise lawsuit--A story Thursday on a lawsuit by former Home Americair Inc. franchisees misstated their claims. They terminated their franchise agreements with the Newport Beach firm, in part, because the company encouraged them to violate Medicare laws, according to the lawsuit.
The company is also the target of a lawsuit in Orange County by eight former franchisees who contend that Home Americair that claim it encouraged or instructed them to violate Medicare laws.
The suit in Orange County Superior Court alleges, among other things, that franchisees have been disqualified, at least temporarily, from Medicare reimbursement.
The plaintiffs, who also claim their franchise agreements were unfairly terminated, seek at least $16 million in general damages and unspecified punitive damages.
The company and its lawyers in the federal action didn’t return calls seeking comment.
Jessica Pers, a San Francisco lawyer representing the company in the Orange County case, said Home Americair denies the allegations and seeks dismissal of several claims.
Pers added that the plaintiffs have been “very successful franchisees,” most of which are owned, at least in part, by the interests of an Oregon man. Pers claimed the franchisees have taken an opportunity to unfairly terminate their franchise agreement and quit paying royalties.
The plaintiffs in the Orange County case include one former franchisee in Santa Ana, two in Los Angeles County and another in San Mateo County.
In the federal case, the government alleges the company trained its franchisees to cheat the system by signing medical approvals that should have been authorized by physicians. It also claims the company encouraged franchisees to improperly seek oxygen therapy for patients under Medicare.
It alleges the company, in an effort to increase the number of patients who were eligible for home oxygen therapy, told franchisees to lower patients’ oxygen levels in the blood by squeezing a patient’s hand, pricking a finger, making patients exercise, or testing them while they slept.
The government joined a whistle-blower suit filed by former operators of a Louisville, Ky., franchise. The whistle-blowers also claimed the company suggested that franchisees pressure salespeople--by offering financial incentives and threatening termination--to sign up as many patients as possible for oxygen therapy.
The government seeks to recover unspecified civil penalties and damages.
Other defendants are Thomas Frank, Home Americair’s founder, president and principal owner; and franchise operators in Louisville, Ky., and Melbourne, Fla.
Home Americair is embroiled in federal civil litigation involving three other former franchisees in Virginia, Texas and Arizona. Earlier this year, the company filed lawsuits claiming the former franchisees violated their contracts and trademark law.
The franchisees countersued. They contended, among other things, that the company’s policies of allegedly encouraging improper business practices had hurt the value of the franchises.
According to court documents, the privately held company has been franchising for more than a decade.
