(NEW BRAUNFELS, Texas) — Late Friday afternoon The Scooter Store, a large power wheelchair and scooter supplier, told almost its entire work force not to come into work Monday. This announcement comes two weeks after federal agents executed a major raid to investigate possible Medicare fraud.
According to The San Antonio Express News, CEO Martin Landon emailed his nearly 1,800 workers to say that they were now on unpaid furloughs, and were not to come to work unless they were one of a very small number of employees who received special notice.
The move is thought to be the product of missed sales and income targets, as well as an ongoing federal investigation looking into possible Medicare and Medicaid fraud.
The Office of the Inspector General issued a report that found that 80 percent of Medicare claims for power wheelchairs failed to meet coverage requirements and should not have been paid by Medicare. An independent auditor found that The Scooter Store only paid back $19.5 million of the $46.8 to $87.7 million in Medicare overpayments it received from 2009 to 2011.
The Scooter Store was largely unresponsive to the charges and public allegations of wrongdoing, until federal agents raided the Scooter Store’s headquarters. Landon issued a statement a week later announcing that said the company is assisting in the federal investigation into its operations, though The Scooter Store denied any wrongdoings and defended its business practices.
An employee who spoke to The San Antonio Express News who asked to remain nameless said that she was not shocked when the furlough order came through, and that many had already seen the writing on the wall.
“I’m afraid it’s the end of the company as we know it, if it’s not the end of the entire company,” she said. “It’s tragic but not totally unexpected.”
Another employee, who is currently pregnant, said that she did not have many options now.
“I’m stuck without a job. There are no jobs in New Braunfels that will pay like The Scooter Store did, so I’m stuck.”
Employees who have been furloughed rather than laid off can still file for unemployment compensation, according to Texas Workforce Commission spokeswoman Lisa Givens.
Copyright 2013 ABC News Radio
Parija Kavilanz, CNN
Paul R. La Monica, CNN