SEPTEMBER 1995 · VOLUME 16 · NUMBER 9
N A M E S I N T H E N E W S
SEPTEMBER 1995 · VOLUME 16 · NUMBER 9
N A M E S I N T H E N E W S
FIRST AMERICAN HEALTH CARE, the largest privately held home health care provider in the United States, submitted $14 million in improper billings to Medicare, a government report found in July 1995.
The General Accounting Office (GAO) report, "Medicare: Allegations Against ABC Home Health Care," found that the Brunswick, Georgia-based company billed Medicare for a BMW for the owner's son, more than $80,000 worth of gourmet popcorn and nearly $1 million in liquor. First American Health Care was formerly ABC Home Health Care.
"We have been working with the U.S. Attorney to pursue both criminal and civil charges against the company," including barring it from Medicare, Medicaid and state health programs for seven years, says Health and Human Services Inspector General June Gibbs Brown. Medicare represents 95 percent of the company's total revenues.
"We are being accused of everything, and we have yet to have a chance to defend ourselves," says Jeff Stives, a spokesperson for the company. Explaining the BMW, Stives says "the son of an owner worked for the company and the company deducted the lease payments from his paychecks -- it was never filed as a reimbursement."
The GAO found that First American forged medical records to make it appear that patients continued to need home health care visits and directed employees to continue visiting patients who did not qualify for care.
An administrative law judge will set a hearing soon.
Pipeline Bottlenecks
A PRELIMINARY JULY 31, 1995 settlement between plaintiffs and defendant corporations Shell Oil Company and Hoechst Celanese in the largest class action property damage lawsuit in U.S. history was denounced as "a farce" that would limit corporate liability to "10 cents on the dollar."
Polybutylene (PB) is a resin that Shell promoted for plumbing pipes beginning in the 1970s. Hoechst and DuPont worked with Shell to develop the resin. Plaintiffs in Cox v. Shell Oil allege that the companies failed to warn consumers that the pipes and fittings corrode when exposed to chemicals that are common in drinking water.
Under the proposed settlement, that received preliminary approval from a Tennessee judge, Shell and Hoechst will pay at least $850 million to fund a program to replace leaking PB pipes and compensate property owners for leak damage. The proposed settlement, which is contingent upon final court approval, leaves the door open to Shell and Hoechst to take legal action against DuPont for its share of responsibility for the complaints.
Pete Petroski, an attorney with the Houston, Texas-based law firm of Fleming, Hovenkamp & Grayson, denounced the settlement proposal, saying it was identical to another one that was thrown out of a Texas state court in February 1995. "Even Shell estimates that it would cost $7.1 billion to replumb every PB house," Petroski says. "Shell and Hoechst Celanese went shopping to see who else would take their settlement offer." Petroski represents PB plaintiffs who are pursuing a class action lawsuit filed against the defendants in state court in Alabama.
Petroski says the proposal "rules out 60 to 70 percent of the leaks -- those within six feet of a water heater."
"We are proud to have reached this landmark settlement and believe it provides meaningful relief to property owners around the country that have been victimized by defective polybutylene plumbing systems," says Michael Withey, president of Trial Lawyers for Public Justice Foundation, which defends the Tennessee case plaintiffs.
"Shell has never believed its polybutylene resin is defective or is responsible for any problems that may have been associated with polybutylene plumbing systems," a statement says. And according to a Hoechst Celanese statement, "Hoechst Celanese is not liable for any alleged defects in these systems, which were designed, manufactured and marketed by other companies."
Stratospheric Pricing
ROCKWELL INTERNATIONAL and Israel Aircraft Industries Ltd. have agreed to settle U.S. government charges that the two companies, in unrelated incidents, improperly inflated the costs of Pentagon billings.
Rockwell International will pay $27 million to settle allegations that it knowingly failed to provide the United States with timely and accurate information on multi-billion dollar contracts to develop the B1-B bomber.
Federal officials alleged Rockwell failed to tell the government about or to pass on cost reductions. Rockwell, based in Seal Beach, California, was awarded two defense contracts totaling $4.4 billion in 1982.
Justice Department Civil Division Chief Frank Hunger says Justice reached the agreement, "which corrects long standing inequities in the prices charged by Rockwell," in June 1995, after informing the corporation of its potential liability under the False Claims Act.
"We are pleased that the matter is finally resolved," Rockwell's Vice President-Law John Stocker says in a brief company release that disputes the government's charges.
In a separate incident, Israel Aircraft Industries Ltd. (IAI) will pay the U.S. government $8.5 million in a July 1995 settlement of allegations that the firm knowingly submitted false cost data for contracts to maintain and provide support for U.S. Navy-leased Israeli Kfir aircraft.
Frank Hunger says the government claims were based on audits of mid-1980s "Aggressor I" and "Aggressor II" aircraft contracts worth $155 million. IAI did not return calls from the Multinational Monitor.
-- Russell Mokhiber