A Findlay medical supply firm with offices in metro Toledo and four other cities has filed for Chapter 11 bankruptcy protection, just weeks after FBI agents seized records in a search of company headquarters.
A lawyer for the firm insisted yesterday that Medi-Care Orthopedic & Hospital Equipment, Inc., has committed no criminal acts and does not know the reason for the search or why the federal government is trying to suspend the firm from the Medicare program.
The 25-year-old company, which employs 100, filed for protection from creditors Monday in U.S. Bankruptcy Court in Toledo because of cash flow problems and the possibility that Medicare will cut off reimbursement, said lawyer Thomas Schank, of Toledo.
The federal health program for the elderly accounts for 25 percent of the firm's $6 million in annual sales, and a loss of that revenue would be a serious blow, the attorney said.
The FBI's Toledo office referred questions to a bureau official in Cleveland, who was unavailable for comment late yesterday.
Judge David Katz, of U.S. District Court in Toledo, issued a temporary restraining order Friday blocking Medicare officials from suspending reimbursement to the firm. He has set a hearing for Nov. 1 to determine whether the order should be continued.
The company argued that its due-process rights had been violated because it hadn't received sufficient advance notice of the Medicare action.
Medi-Care, which has a name similar to the federal program, was notified of its suspension in an Oct. 8 letter from a fraud analyst for Medicare who cited a rule barring participants from making “any false statements or misrepresentation of a material fact on its application for billing privileges. ...”
The firm attached a copy of the letter to a lawsuit demanding reinstatement to the Medicare program.
The bankruptcy petition disclosed that the firm's offices were the subject of a search by federal agents. The company attorney said the search was in early October and that records were taken.
The Hancock County firm sells and rents medical equipment for home use, builds handicap access facilities, and provides emergency medical monitoring, according to its Chapter 11 petition, which lists $2.9 million in assets and $1.5 million in debt. The company intends to conduct business as usual, Mr. Schank said.
The company, with stores on Reynolds Road in Toledo and in the suburb of Oregon, as well as Findlay, Fremont, Bowling Green, and Sandusky, is owned by J. Michael Frantz, of Findlay.
First Published October 23, 2002, 10:48 a.m.