Rotech agrees to pay $9.68M, signs $185M credit agreement

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Friday, April 13, 2018

CLEARWATER, Fla. – Rotech Healthcare has agreed to pay $9.68 million for submitting false claims for portable oxygen contents to Medicare, according to an April 12 press release from the Department of Justice.

As part of the settlement, Rotech admitted to billing portable oxygen contents to Medicare for beneficiaries who did not use or require them. Additionally, the company admitted to billing Medicare regardless of whether such contents were delivered, the release states.

“This settlement serves as a warning to suppliers who bill first and ask questions later,” said Acting Assistant Attorney General Chad Readler, head of the DOJ’s Civil Division. “We will investigate and take action against companies who cut corners and place profits over compliance with Medicare’s billing requirements.”

Between January 2009 and March 2012, Rotech automatically billed Medicare for portable oxygen contents for all Medicare beneficiaries after the 36-month rental period, without verifying that the beneficiaries used or needed portable oxygen and without obtaining the requisite proof of delivery. The company continued this practice despite knowing that it resulted in the submission of claims for portable oxygen contents that were ineligible for reimbursement, according to the DOJ.

The settlement resolves allegations outlined in a whistleblower lawsuit filed under the False Claims Act by Janet Hale, a former employee of Rotech’s billing department. She will receive $1.65 million as part of the settlement.

In its own release, Rotech says the lawsuit was based on “facts (it) identified and self-disclosed to the government and public in 2012, repaying over $6 million in identified overpayments.”

“In 2009, Rotech, under previous executive management, implemented a defective automatic billing program to meet new regulations for certain oxygen contents claims—immediately upon identifying the error, this billing program was fixed,” the company explains. “Since 2012, Rotech has conducted regular audits of oxygen contents claims and has discovered no further errors in this process.”

Rotech’s President and CEO Tim Pigg says the company is glad “this matter is now behind (it) and is focused on the future.”

Rotech signs $185M credit agreement

ORLANDO, Fla. – Rotech Healthcare has obtained a $185 million credit facility to “continue (its) growth strategies.”

The five-year agreement with SunTrust Bank, SunTrust Robinson Humphrey, Inc., Regions Bank and Fifth Third Bank comprises a $160 million loan and a $25 million revolving line of credit, according to a press release.

“I am pleased with the completed refinancing and want to thank SunTrust, Regions and Fifth Third for leading this effort,” said Tim Pigg, CEO of Rotech. “These new credit agreements provide Rotech with sufficient capital over the next five years to continue our growth strategies.”

Rotech has acquired numerous smaller DME companies over the years and expects to acquire more as the fallout from Medicare’s competitive bidding program continues. In 2017, those acquisitions helped the company grow its three major product lines by 18% to 32%, according to the release.

Simultaneously, Rotech is also working with industry groups and CMS on efforts to stabilize DME pricing and reverse access to care issues, Pigg says.

“We remain hopeful that some of these actions will be implemented later this year,” he said.