Scooter Store Bankrupt After Medicare Audit Uncovered Fraud


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iStockphoto/Thinkstock (file photo)(NEW YORK) — The Scooter Store, which claims it has given 700,000 senior citizens back their mobility, has itself run aground.  

The company this week filed for Chapter 11 bankruptcy, listing assets of $1 million to $10 million and liabilities of between $50 million and $100 million.

Major creditors include the Centers for Medicare and Medicaid Services (CMS), which, according to the filing, is looking to collect $19.5 million — the amount the Scooter Store previously had agreed to repay the U.S. government after an independent audit found that the company had overbilled Medicare and Medicaid by $46.8 million to $87.7 million from 2009 to 2011.

Last month, agents of the FBI, the Office of the Inspector General, the U.S. Department of Health and the Texas Attorney General’s office raided the Scooter Store’s headquarters in New Bruanfels, Texas.  Two weeks after that, Scooter’s CEO Martin Landon sent an email to employees telling them not to return to work until further notice.

The government audit found that seniors with no medical need for a power chair had nonetheless gotten one through the Scooter Store — an outcome due in part to the company badgering doctors to prescribe its products.

The company, which according to bankruptcy filings once had over 2,400 employees, now gets by with just 300.  It has stopped selling chairs and stopped running its once ubiquitous TV commercials promising seniors they could not be turned down for a “free” power chair, courtesy of government health coverage.

Asked what will happen to the estimated 20,000 seniors who now depend on Scooter chairs to get around, a spokesperson familiar with the bankruptcy proceeding tells ABC News they shouldn’t worry.

“Customers should know their service needs should continue to be met at the company’s existing distribution centers,” the spokesperson says.

There are 57 centers in 41 states.   A bankruptcy court approved a motion by Scooter Store management to continue to honor the company’s obligations to customers.

Longer term, says the spokesperson, it’s not possible to say what seniors should expect.  Management’s intention, she says, is to sell the company.  It would be up to any new owner whether to continue in business or to liquidate.

Copyright 2013 ABC News Radio

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