Apria to Settle Whistle-Blower Suit for $1.65 Million

Apria Healthcare Group Inc. said Monday that it has reached a tentative agreement to pay the government $1.65 million to settle civil charges in a whistle-blower lawsuit alleging the company paid kickbacks to medical providers in exchange for patient referrals.

A parallel government criminal investigation into issues raised in the case continues, however, the company acknowledged.

The Costa Mesa company, which provides medical services and equipment to patients at home, said it still disputes allegations brought by a former branch manager against one of Apria’s predecessors, Homedco Group Inc. Apria settled to “avoid the distraction and additional expense” of a long legal battle, Jeremy M. Jones, chairman and chief executive officer, said in a prepared statement.

In the case filed last year in an Atlanta federal court, Mike Parker, the former branch manager, claims the company improperly gave a Georgia medical group free benefits, such as lung-function testing, and improperly obtained doctors’ certifications that products such as oxygen and specialty beds were medically necessary for patients.

He claimed the company got several hundred thousand dollars in business revenue from federal Medicare or Medicaid programs for services that were delivered in exchange for illegal referral payments. Parker’s lawyer, Mike Bothwell, contends the company appeared to have entered into similar agreements with doctors and other medical providers across the country.

The Justice Department later intervened in the case.

Apria said the tentative agreement still must receive federal approval. A government spokesman refused to comment on the case.

The lawsuit contended that the questionable payments were made by Homedco, which merged with Abbey Healthcare Group Inc. in June 1995 to form Apria.