In brief: Arriva Medical appeals revocation, VGM names new CFO

WALTHAM, Mass. - The parent company of Arriva Medical, a contract supplier under Medicare's national mail-order program for diabetes testing supplies, has filed an appeal with the administrative law judge seeking to reinstate its billing status.

Arriva Medical expects the ALJ to hear its appeal within 30 days and issues a decision in three months, it stated in a Dec. 28 update on its website.

“We believe the recent action by CMS to remove Arriva from CMS billing is unlawful, arbitrary and capricious, and harmful to the more than 500,000 patients who depend on Arriva for these critical supplies,” it stated. “We are confident that Arriva is in compliance with CMS guidelines and look forward to an expeditious and favorable outcome.”

CMS revoked Arriva Medical's billing privileges in November for allegedly submitting 211 claims for deceased patients between April 15, 2011, and April 25, 2016.

Arriva Medical says any errors were the result of “Medicare system flaws.”

Additionally, “the number of purported instances cited by CMS is de minimis relative to the nearly 5.8 million total claims filed by Arriva during that same period,” it stated.

In addition to the appeal, Alere has filed a complaint and related motions in the U.S. District Court for the District of Columbia seeking to compel CMS to stay the process regarding the competitive bidding contract termination while the ALJ appeal is ongoing and to compel CMS to provisionally reinstate Arriva's billing number while the company pursues the ALJ appeal. It expects a decision on the complaint on or about Jan. 5.

Arriva Medical received a letter from CMS on Oct. 12, informing the company that effective Nov. 4, the agency was revoking its supplier billing number and barring it from re-enrolling in the Medicare program for three years. Then on Nov. 2, CMS upheld its decision based on a four-day, mechanical review.

“CMS reached this conclusion in spite of evidence provided by Arriva demonstrating that any errors were primarily the result of Medicare system flaws,” Arriva Medical stated.

Arriva Medical says it is confident in the merits of the case because:

. Arriva and the Medicare beneficiaries its serves will suffer irreparable harm if injunctive relief is not granted;

. The balance of equities and the public interest are decidedly in favor of Arriva;

. Arriva is likely to succeed on the merits of the case because CMS's action are depriving Arriva of protected property and liberty interests without due process; and

. CMS's refusal to grant Arriva a pre-termination hearing violates due process.

Sleep clinic agrees to pay $2.6M for dual role

SAN JOSE, Calif. - Bay Sleep Clinic and its related businesses have agreed to pay $2.6 million to settle allegations that they were involved in both the diagnosis and treatment of sleep patients, a violation of Medicare rules and regulations.

The government charged Bay Sleep Clinic and its related businesses—Qualium Corp., which operates 20 sleep clinics, and Amerimed Corp., which does business as Amerimed Sleep Diagnostics and Amerimed CPAP Specialist—with fraudulently billing Medicare for medical devices in violation of rules and regulations that prohibit providers of sleep tests from supplying medical devices and from sharing a sleep lab location with a DME supplier.

The government also charged the companies with fraudulently billing Medicare for sleep tests allegedly performed by technicians lacking the required licenses or certifications, and with fraudulently billing Medicare for sleep tests that were allegedly conducted at un-enrolled and unapproved locations.

The allegations against Bay Sleep Clinic were set out in an amended False Claims Act complaint filed by the government on Aug. 8, 2016.

The government intervened in a whistleblower action filed under the qui tam provisions of the False Claims Act. The act allows for private persons, such as Elma Dresser in this case, to file actions to provide the government with information about wrongdoing and then obtain a portion of the government's recover. Dresser will receive about $545,000.

As part of the agreement, Bay Sleep Clinic has voluntarily terminated its two existing Medicare enrollments and agreed not to re-enroll as providers in the Medicare program for a period of three years.

The claims resolved by the settlement are allegations only and there has been no determination of liability.

AvaCare Medical buys online scrubs company

LAKEWOOD, N.J. - AvaCare Medical, an online medical supply store, has acquired Medical Scrubs Collection, an online medical scrubs store.

AvaCare CEO Steven Zeldes and CFO Mark Bakst say they plan to use their “skills in entrepreneurship” to bring the same growth that they've experienced at AvaCare to the Howell, N.J.-based Medical Scrubs Collection.

“We see this as an opportunity to pass on our success at AvaCare Medical to Medical Scrubs Collection,” said Zeldes. “Having worked in the healthcare industry for years, this company fits right into our line of expertise. We also know that many customers at AvaCare Medical are caregivers who can benefit from this acquisition.”

Bakst will also serve as the new CEO at Medical Scrubs Collection.

Medical Scrubs Collection opens the door for AvaCare Medical to expand into the nursing home, hospital and assisted living industries.

“(We plan to offer) them the same easy online shopping experience,” he said.

Medical Scrubs Collection has made a name for itself with its quick checkout, easy returns, personal wish lists and true-to-fit sizing guide. It also offers price match guarantees, as well as large discounts.

AvaCare Medical's acquisition of Medical Scrubs Collection follows the launch of its new and improved website in June.

VGM names new CFO

WATERLOO, Iowa - The VGM Group has promoted Jeff Rummel, its controller and vice president of accounting, to CFO. Rummel succeeds Mike Mallaro, who became CEO in 2016, following the death of Van Miller, CEO and founder, in 2015. In his new role, Rummel, who joined VGM in 2015, will be responsible for providing strategic and financial leadership. “In Jeff's time at VGM, he has endeavored to understand our various businesses in the depth needed to contribute meaningful counsel,” Mallaro said in a press release. The promotion is effective immediately. Rummel will also continue to serve as controller until VGM fills that position.

Invacare informs holders of repurchase rights

ELYRIA, Ohio - Holders of Invacare's 4.125% convertible senior subordinated debentures issued Feb. 12, 2007, and due 2027 have the right to surrender their notes for repurchase by the company, it confirmed Dec. 24. A put option under the indenture governing the debentures entitles each holder to require the company to repurchase for cash all or in part (in principal amounts equal to $1,000 or multiples thereof) of their debentures on Feb. 1, 2017, for a purchase price equal to 100% of the principal amount of the debentures, upon the terms and subject to the conditions set forth in the indenture and the debentures. The purchase price will not include accrued and unpaid interest. The company will pay, on the interest payment date, accrued and unpaid interest on all of the debentures through Jan. 31, 2017, to all holders who were holders of record on Jan. 15, 2017. As of Dec. 23, 2016, there was $13.4 million aggregate principal amount of the debentures outstanding. The offer expires at 5 p.m. EST on Jan. 30, 2017.