ARV Assisted Living Inc. will be acquired by its largest shareholder, the company said Friday, shortly after settling Medicare fraud allegations by a subsidiary touched by a notorious Newport Beach murder case.
Prometheus Assisted Living will pay $47 million, or $3.90 a share, for the 56.5% of Costa Mesa-based ARV that it doesn't already own. Prometheus also will pay off $7.2 million in ARV notes and assume $112 million in long-term debt.
New York-based Prometheus plans to combine ARV with Atria Inc. and Kapson Senior Quarters Corp., two privately held assisted living companies it already owns. ARV operates assisted living facilities in 11 states and has about $160 million in annual sales.
Without admitting guilt, ARV agreed to pay $1.6 million to settle allegations that its GeriCare subsidiary incorrectly billed Medicare for services during a six-year period ending in 1998. ARV purchased GeriCare in 1996 and has since discontinued the business.
Assistant U.S. Atty. Donna Maizel declined to discuss details but confirmed that GeriCare provided physical therapy to the elderly and was run by the husband-and-wife team of Eric and Pegye Bechler until they were fired by ARV in 1997.
Pegye Bechler disappeared a few months later, after taking a boat ride with her husband off Newport Beach to celebrate her 38th birthday. A jury in 2001 convicted Eric Bechler of her murder, finding he bludgeoned his wife with a dumbbell, then dumped her body into the ocean.
Authorities suspected Bechler from the time his wife vanished, and blocked his efforts to cash in a $2-million life insurance policy. But he wasn't arrested for more than two years. The break in the case came after Bechler's girlfriend, model and "Baywatch" actress Tina New, secretly tape-recorded him admitting to the crime. Bechler is serving a life sentence; his wife's body was never found.
The government probe into GeriCare's Medicare billings came after a tip from Mutual of Omaha, one of several companies that administer claims for Medicare, Maizel said. ARV Chief Executive Abdo H. Khoury said ARV learned of the federal probe two months ago.
The Prometheus offer of $3.90 a share represents a premium of about 50% over the price of ARV shares in mid-September, when Prometheus made an offer of as much as $3.60 a share. Before the merger announcement Friday, ARV shares rose 6 cents on the American Stock Exchange to $3.75.