Rotech's VA rogue cracked

Monday, September 30, 2002

ORLANDO, Fla. - A man claiming to be the Rotech Healthcare employee who booked $30 million in bogus business with the Department of Veteran's Affairs, says he did so under intense pressure to make the company look good and to keep his $250,000 a year job.

"The pressure was relentless," said the man who called HME News but declined to give his name. "It was, 'Well our numbers don't look good this month, and if we don't come up with something we are all screwed. Come on, do something, do something.' And you are going, 'What the hell, I already did."'

Rotech announced in July that an unnamed employee concocted a sophisticated scheme to book $30 million in bogus business with the VA. Company officials said Rotech never billed the VA for any of the business, and that the company was the only victim in the scheme. The company has finished its internal investigation and turned the case over to the Department of Justice.

Nobody in the company explicitly told him to cook the books, the employee said. The pressure to boost his sales led him down that path, and he blamed that on his superiors.

"I was wrong in what I did, but I was making $250,000 a year," he said. "If I walked, where was I going to replace that?"

Rotech declined to comment for this story, beyond reiterating the company's belief that neither Linehan nor Novel had anything to do with the scheme. The company, which has yet to name or bring charges against the alleged rogue employee, plans to issue revised financials this fall.

Rotech operates 600+ locatons in 47 states, and generated roughly $600 million in revenue in 2001.

Prior to retiring from Rotech in July, Sheila Bell, 57, managed the company's largest division, one spanning nine states and generating $144 million in annual revenue. Of the $30 million in bogus VA business recorded during the 18 months running from late 2000 to mid 2002, $5.4 million went on her books, she said.

Bell called the alleged crook "a nice young man but very confused," someone bent on making a name for himself.

"The world is not going to believe that one little man single-handedly did this, but he did," she said. "At times I needed to talk to a VA person because I needed to know the specs, what kind of wheelchair they needed, for example. He got VA people to talk to me. Would you not think that was legit."

The VA sources, she said, turned out to be the employee's friends.

"We were all victims of a personality we were not prepared to deal with," Bell said. "I've never dealt with a criminal. I don't know what to look for."

While it is not unusual for employees to feel intense pressure to perform, cooking the books is criminal and, obviously, in no way acceptable, remarked industry watchers who expressed no sympathy for the alleged crook.

As one put it: "If you need money, do you go rob a bank? It's best not to. And you don't become a crook just because you have some pressure on you."

But if the fraud continued over 18 months without the company discovering it, as Rotech claims, the company's got some serious internal compliance problems, said healthcare attorney Ann Berriman.

"When you put that kind of financial pressure on people and don't have the safeguards in place, you are inviting problems," she said. HME