Almost Family, Inc. Investors File Lawsuit
An investor in AFAM stock filed a lawsuit Kentucky Court on behalf of investors in Almost Family, Inc. (NASDAQ:AFAM) against senior officers and board of directors of Almost Family, Inc. based
Almost Family, Inc, located in Louisville, KY, along with its subsidiaries, is a provider of home health services. Almost Family, Inc. reported in 2007 $130.91million in Total Revenue, in 2008 $.211.52million, and in 2009 $297.85million. According to the complaint the plaintiff alleges that certain senior officers and board of directors of Almost Family, Inc illegally manipulated their business practices in order to obtain excessive Medicare reimbursements. The plaintiff accuses that certain senior officers and board of directors of Almost Family, Inc were not scheduling visits to clients on the basis of their need for home health services, but in order to capitalize on the most Medicare reimbursements. The lawsuit follows an article from the Wall Street Journal. On April 27, 2010, The Wall Street Journal reported that an analysis by the Wall Street Journal of Medicare payments to home health-care companies in recent years raised questions about whether some companies, including the sector’s largest company Amedisys Inc., are taking advantage of the Medicare reimbursement system. The article also names Gentiva Health Services Inc. (Nasdaq: GTIV), LHC Group, Inc. (Nasdaq: LHCG), and Almost Family Inc. (Nasdaq: AFAM). The April 26, 2010 article further stated that “[t]he results show that the number of in-home therapy visits tracks Medicare financial incentives.”
On May 13, 2010, the Wall Street Journal further reported that the Senate Finance Committee had launched an investigation into the practices of Amedisys Inc., Gentiva Health Services Inc., LHC Group Inc., and Almost Family Inc. According to the May 13 Wall Street Journal article, letters were emailed to the CEOs of each of the four companies requesting that each company provide information on their companies’ therapy visits from 2006 through 2009 and about financial relationships with referring physicians. Senate Finance Committee Chairman Max Baucus and Ranking Republican Member Charles Grassley wrote, "These findings suggest that HHAs are basing the number of therapy visits they provide on how much Medicare will pay them instead of what is in the best interests of the patients". Additionally, the May 13, 2010 article stated as follows: “The home therapy numbers cited in the [April 26, 2010 WSJ article], which came from publicly available Medicare claims, “suggest home health agencies intentionally increased utilization for the purpose of triggering higher reimbursements,” the senators wrote in letters that were emailed to the chief executives of the four companies”.
On July 1, 2010, Almost Family announced it received a civil subpoena for documents and notice of investigation from the U.S. Securities and Exchange Commission (SEC) seeking documents related to Almost Family’s home health care services and operations, including reimbursements under the Medicare home health prospective payment system, since January 1, 2000.
The suit claims that "for at least the past four years, with the approval of the Company's senior officers and its Board of Directors (the "Board"), Almost Family has gamed the Medicare and Medicaid system by ensuring that its health providers visited patients a sufficient amount of times to trigger the additional payments".
AFAM shares declined from $36 per share on June 30, 2010, to almost $29 per share on July 01, 2010. Shares of Almost Family, Inc. (AFAM) traded recently at $25.60 per share, down from its 52weekHigh of $44.12 per share and over $51 per share in 2008.