Joel R. Glucksman
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201-896-7095 jglucksman@sh-law.comFirm Insights
Scooter Store Seeks Bankruptcy Protection After Federal Raid Uncovers Fraud
Author: Joel R. Glucksman
Date: April 30, 2013
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The Scooter Store Holdings, a popular company that sells motorized scooters and wheelchairs throughout the U.S., was forced to file for bankruptcy protection under Chapter 11 of the Bankruptcy Code after a federal raid proved the company was guilty of fraud.
In March, the Federal Bureau of Investigation, the Office of the Inspector General, the U.S. Department of Health and the Texas Attorney General’s office raided the company’s Texas headquarters and discovered that thousands of seniors who lacked a medical need for the company’s products had obtained a motorized scooter or wheelchair, in part due to the company’s aggressive harassment of medical clinics to prescribe its products, according to ABC World News.
In addition to the raid, which prompted the company to suspend its operations, the Scooter Store is also facing claims from Centers for Medicare and Medicaid Services (CMS). The agency is seeking to collect $19.5 million, an amount the company agreed to pay following another investigation that revealed Scooter Store overbilled Medicare and Medicaid by tens of millions of dollars between 2009 and 2011.
“Historical overhangs coupled with an increasingly complex regulatory environment and mounting economic pressure in the health-care sector have significantly impacted the company’s ability to operate under its current model,” said CEO Martin Landon, according to Bloomberg.
The company listed assets between $1 million and $10 million and liabilities of between $50 million and $100 million. Following the government raid and its decision to file for bankruptcy protection, the Scooter Store has been forced to reduce its workforce from 2,400 to 300 employees. While the company acknowledges that a series of federal investigations have “imposed significant financial burdens” and damaged its reputation, it said it is fully cooperating with authorities in both criminal and civil lawsuits.
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