MANHATTAN (CN) - The Securities and Exchange Commission claims former officers and employees of medical transcription company MedQuist Inc. artificially boosted the company's performance by inflating the number of lines of medical text they purportedly transcribed.
In three separate lawsuits in Federal Court, the SEC charged MedQuist, John A. Donohoe Jr., and Brian J. Kearns and Bruce J. Van Fossen with securities fraud for their roles in the allegedly fraudulent billing scheme.
"The company was able to carry out this scheme for several years because the unit of measure upon which many bills were based - known as an AAMT line - included invisible characters and computer keystrokes that could not be verified by MedQuist's customers," the SEC claims. "Knowing that its customers were unable to verify line counts on bills, the company stopped actually counting AAMT lines and started secretly manipulating the line counts on bills to reach specific revenue and margin targets."
The SEC says MedQuist exploited the lack of transparency in AAMT line counts from 199 to 2004.
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