Alere Faces Criminal Probe Over Billing -- WSJ
July 28 2016 - 3:03AM
Dow Jones News
By Liz Hoffman, Aruna Viswanatha and Jonathan D. Rockoff
Federal investigators are seeking information about
government-billing practices at Alere Inc., adding to a litany of
woes at the diagnostic-testing company as it seeks to complete a
deal to sell itself.
The Justice Department's criminal-fraud section sent Alere a
subpoena recently seeking patient-billing records, according to
people familiar with the matter. It asked for information about
Alere's efforts to collect copayments from patients, as well as
forms submitted on their behalf to government programs such as
Medicare, the people said.
Federal law bars health-care companies from covering the
payments for patients insured by government programs like Medicare
and Medicaid. The Justice Department also is investigating whether
Alere made payments or delivered items of value to doctors who
order the tests, the people said. The government considers such
forms of assistance to be illegal kickbacks.
Alere confirmed in a statement that it has received a subpoena
related to a Texas laboratory and that it is fully cooperating with
the investigation. Government-related billing at the facility
accounted for "significantly less" than 1% of Alere's total revenue
through the first nine months of 2015. Alere said it believes the
matter is not material.
A Justice Department spokesman declined to comment.
Alere's toxicology unit, the subject of the probe, provides
drug-testing for employers and government bodies. It accounted for
one-quarter of the company's $2.57 billion revenue in 2014. Alere
specializes in tests for HIV, tuberculosis and the presence of
drugs and other toxins. The tests can be administered at the point
of care, giving quick results for doctors and first responders.
Alere in February agreed to be acquired by Abbott Laboratories
for nearly $5 billion, a transaction that has yet to close.
Alere shares tumbled 29% during regular trading on the news and
were 40% below Abbott's $56-a-share offer, suggesting investors are
nervous the deal may fall apart.
The company has previously said that in Dec. 2014 it received
subpoenas from the U.S. Attorney for the District of New Jersey
asking for documents relating mainly to billing and marketing
practices in toxicology testing.
In March, Alere said it was under federal investigation for
business practices in Africa, Asia and Latin America. An internal
investigation into the matter has delayed its 2015 annual financial
statement by months. Alere faces an August deadline to file the
document or risk defaulting on some of its debt and being delisted
from the New York Stock Exchange.
This month, Alere said it would recall devices that produced
some erroneous readings on how quickly patients' blood clotted when
they were taking anticoagulant medicines. The company faces at
least one shareholder lawsuit related to the devices.
Also this month, Alere said it would revise its earnings for the
past three years. It said it doesn't expect the changes to be
material, but that its internal investigation is likely to spark a
finding of material weakness in the company's internal
controls.
In April, Abbott Chief Executive Miles White was noncommittal on
a conference call about whether the company still intended to
complete the transaction. A few days later, Alere said it had
rejected a private proposal from Abbott to call off the deal.
Abbott is simultaneously trying to close the $25 billion
acquisition of St. Jude Medical Inc., and some Abbott executives
worry it will be complicated by the continuing issues at Alere,
according to people familiar with the matter.
Abbott's seeming ambivalence comes as some big mergers signed
during the recent boom have crumbled for one reason or another.
Energy Transfer Equity LP recently escaped its $33 billion takeover
of Williams Cos. on a tax technicality after sliding oil prices
damped its enthusiasm for the deal.
Two large health-insurer mergers are now being challenged by the
Justice Department. At one of them, the $48 billion proposed tie-up
of Anthem Inc. and Cigna Corp., tensions between respective
officials at the companies may make it more likely the deal will
fall apart.
Write to Liz Hoffman at liz.hoffman@wsj.com, Aruna Viswanatha at
Aruna.Viswanatha@wsj.com and Jonathan D. Rockoff at
Jonathan.Rockoff@wsj.com
(END) Dow Jones Newswires
July 28, 2016 02:48 ET (06:48 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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