lhcgroup.com
LHC Group settles US government lawsuit, to pay $65 million
LHC Group (NASDAQ:LHCG) announced Friday it has settled a lawsuit brought against it by the U.S. District Court for the Western District of Louisiana, which was based on a complaint regarding LHC's process of determination for "medical necessity", a legal doctrine that justifies the coverage of certain medical activities and services.
Under the terms of the settlement, the provider of home health and care services said it will pay $65 million, with $25 million in cash and the remainder coming from its current credit facility.
The company was first warned of an inquiry in July 2010 by the SEC that would centre on Medicare re-imbursement between 2006 and 2008. Specifically, the suit questioned whether certain medical records during that period contained sufficient documentation to support the determination of medical necessity.
LHC said it chose to settle in order to avoid the disruption and expense of a long legal dispute. The company also said in a statement that the suit did not question its quality of patient care.
"At LHC Group, we are fully focused on our core mission of providing high-quality, cost-effective care to the nearly 80,000 patients we serve across 19 states each year," said CEO Keith G. Myers.
"We stand behind the skill, compassion and quality of care provided by the local physicians and nurses involved in the evaluation and determination of services delivered to meet the specific needs of every patient we serve."
LHC said it plans to pay down its $40 million credit balance from the settlement to under $20 million by the end of 2011.
The charge will be recorded in the third quarter, and is expected to negatively impact income by $41.3 million, or $2.25 per share.
The settlement will also see LHC enter into a corporate integrity agreement with the Office of the Inspector General of the U.S. Depart of Health and Human Services.
