Medicare Fraud Alleged in Class Action

LOUISVILLE (CN) - Shareholders claim that Almost Family, which runs home health-care services in 11 states, committed Medicare fraud to "increase revenues and inflate company stock." The federal class action also claims that CFO C. Steven Guenthner dumped 20,000 shares at inflated prices for $840,000 before the price collapsed.

Louisville-based Almost Family Inc. offers two types of services, the complaint states. Personal Care is more of a "custodial rather than a skilled" service, and its Visiting Nurse program provides "skilled medical services" at home so patients can "reduce or avoid periods of hospitalization."

Ninety percent of the company's Visiting Nurse revenue comes from Medicare, the complaint states.

Shareholders say the company "artificially inflated" its revenue and sales by "billing patients for the more profitable in-home services - for which the company would receive a higher reimbursement rate from Medicare - regardless of patients' need for those more expensive services."

It adds: "Defendants took advantage of Medicare incentives that provide extra fees for increasing numbers of at-home therapy visits," and increased "the number of in-home visits for patients regardless of their needs."

In April this year, the Wall Street Journal published an article about home health-care companies, including Almost Family, that questioned where some were "taking advantage of the Medicare reimbursement system."

Several months later, the complaint continues, the SEC started investigating Almost Family and others for securities fraud. A U.S. Senate committee investigation then revealed "materially adverse truth about Almost Family's fraudulent conduct and business prospects," according to the complaint.

Shareholders also sued CEO William B. Yarmuth, citing, among other things, statements he made during the brouhaha set off by the Journal article.

Named plaintiff Blaze B. Huston says he bought common stock of Almost Family based on the defendants' "false and misleading statements," which, when disclosed, caused the share price to drop by nearly 30 percent: from $44.12 to $31.05.

The class's lead counsel is Charles Miller with Miller & Falkner of Louisville.

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