http://www.mysanantonio.com/business/article/Scooter-Store-lays-off-entire-workforce-4340480.php
Scooter Store's staff on furlough
By Patrick Danner, Staff Writer
Updated 2:00 am, Saturday, March 9, 2013
Agents stage from their vehicle in front of the building as FBI and OIG raid the Scooter Store in New Braunfels on February 20, 2013.Photo: TOM REEL, Tom Reel/Express-News
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Late Friday afternoon, The Scooter Store's chief executive notified employees that — effective immediately, but “with certain exceptions” — they'd been placed on unpaid furlough.
In an email, CEO Martin “Marty” Landon told employees not to return to work unless they receive notice from the company's human resources department.
The Scooter Store, one of the nation's largest suppliers of power wheelchairs and scooters, had about 1,800 workers as of last month. That's following the announcement in February that it had cut 150 positions.
About 1,200 employees worked out of its New Braunfels headquarters.
The furloughs came a little more than two weeks after federal agents executed a search warrant at the company's headquarters, presumably as part of an investigation into Medicare and Medicaid fraud.
About 150 agents from the FBI, the Office of the Inspector General (OIG) of the U.S. Department of Health and Human Services and the Texas attorney general's Medicaid Fraud Control Unit participated in the raid.
The company, meanwhile, has struggled to adapt to changes in claims processing and cuts in reimbursements implemented by the Centers for Medicare and Medicaid Services (CMS).
The moves are part of an effort by CMS to crack down on fraud.
“As you know, the company has been experiencing significant business challenges, which have adversely impacted our financial condition,” Landon said in the email to employees. “As a result, we our streamlining our current operations to allow us to continue to provide service to our customers in an appropriate manner.”
Employees expected to return to work on Monday will receive a notice from the company, Landon said in the email. He didn't specify how many employees will be brought back.
Efforts to reach Landon and other Scooter Store executives were unsuccessful.
The company, on of the largest employers in Comal County, probably is best known for its ubiquitous TV ads
An employee who asked not to be identified said she wasn't surprised by the furlough announcement.
“I'm afraid it's the end of the company as we know it, if it's not the end of the entire company,” she said. “It's tragic but not totally unexpected.”
The company, she added, has been missing its sales and net income targets.
Another employee who is pregnant said she didn't know how she was going to take care of her unborn child.
“What am I going to do?” she said. “I'm stuck without a job. There are no jobs in New Braunfels that will pay like The Scooter Store did, so I'm stuck.”
She also wondered how The Scooter Store can expect workers to be “on-call like a doctor” to see if they'll be asked to return to work.
“I don't think I'm getting paid like a doctor,” she added, “so I don't understand why I have to be on call for my job.”
Even though employees have been furloughed rather than laid off, Texas Workforce Commission spokeswoman Lisa Givens said workers still can file for unemployment compensation.
“Any loss of employment would allow someone to make a claim for unemployment,” Givens said. “Whether it's perceived to be temporary or not, they're unemployed.”
The power-mobility industry has been the target of federal probes into Medicare fraud. Some 80 percent of Medicare claims for power wheelchairs did not meet coverage requirements and should not have been paid by Medicare, the OIG concluded in a 2011 report.
The Scooter Store has denied wrongdoing and defended its business practices. It has served more than a half-million customers, it has said.
The company has been under plenty of scrutiny in recent months.
Two U.S. senators in December sent a letter to CMS wanting to know why The Scooter Store had received, according to an independent auditor, somewhere between $46.8 million and $87.7 million in Medicare overpayments from 2009 to 2011 but only had to pay back $19.5 million.
CMS later said it accepted the amount based on The Scooter Store's analysis of the auditor's report. The company was given five years to repay.
In January, a CBS News report questioned whether power wheelchair companies were “ripping off the government.”
One ex-Scooter Store employee told CBS the company's goal is to “bulldoze” doctors into writing prescriptions for power wheelchairs.
A few weeks later, CMS announced that Medicare will pay on average 36 percent less for power wheelchairs and scooters beginning July 1 in more than 90 cities.
Separately, last summer, CMS implemented a three-year demonstration program that requires durable medical equipment providers to get “prior authorization” from Medicare before patients living in any of seven states receive a power wheelchair or scooter.
The states, Texas included, have “high populations of fraud- and error-prone providers,” CMS said in August.
With all of the changes, The Scooter Store last month announced plans to expand its offerings of products and services. It didn't offer any details, however.
Then, on Feb. 20, authorities raided The Scooter Store's headquarters.
Nearly a week later, Landon issued a statement that said the company is assisting in the federal investigation into its operations.
“The Scooter Store team has strived to meet the highest standards of compliance, as we help people who face true mobility challenges,” Landon said. “If we learn of procedural shortcomings or personal misconduct, we will investigate and take appropriate corrective action.”
FBI Special Agent Erik Vasys said late Friday that he had no update on the federal investigation.
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