Scooter Store CEO denies federal investigation
CEO Martin Landon: 'Our access to capital has been declining'
Scooter Store CEO Marty Landon, in an email sent out to employees on Sunday, denied that his beleaguered company is under investigation by the Department of Justice.
"The Department of Justice has informed our legal counsel that the company is not a target of this investigation and we will continue to cooperate with the government in their work," Landon wrote. "Nonetheless, our access to capital has been declining rapidly since that time."
On Feb. 20, the New Braunfels-based company was raided by federal and state officials as part of what at the time was described as an ongoing investigation into possible Medicare fraud.
Most Scooter Store employees left the building that day, referring all inquiries to the FBI.
In that email, Landon told his workforce of about 1,200 employees to not come to work unless they're advised to do so by the company human resources department.
"With the help of outside experts, we are conducting a review of our policies, practices, finances and resources to identify a viable path forward," Landon wrote in his most recent email. "As we conduct this review, we will operate with a contingent of core personnel and focus on our current customers to ensure that operations are not unnecessarily disrupted. Our Human Resources department or someone authorized by the Human Resources department either has or will notify those employees who are being asked to return to work at this time."
In September 2012, the company laid off 220 workers.
At the time, company officials blamed a 40 percent drop in Medicare reimbursements for power mobility devices in part for the reduction in force.
The government also changed its pay schedule, requiring patients to rent the scooters rather than pay for them outright. Those changes, coupled with a new program that requires prior authorization for patients to get coverage for a scooter, forced the company to reassess its business model, a spokesman said at the time.
The changes to the way Medicare handles scooter claims came after an audit by the Office of the Inspector General, which found rampant fraud in seven states, including Texas, involving power mobility devices.
Then, on Feb. 8, the Scooter Store announced the further elimination of 150 jobs. In a news release issued at the time, the company blamed the layoffs on "the result of recent announcements by government agencies related to fundamental changes in claims processing procedures and reductions in reimbursement amounts."
New Braunfels Mayor Gale Pospisil said the city has been kept in the dark concerning the furloughs.
“I’m a little disappointed that we didn’t get any kind of notice or discussion,” said Pospisil. “I know they didn’t talk to the chamber of its economic development group either.”
The mayor said the city currently has a 5.4 percent unemployment rate and she is concerned about the impact on that if the furloughs become permanent.
“It is the city’s largest private industry employer of permanent employees,” Pospisil said.
No one from the company has been available to discuss the employment situation at the company with the media.
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