LHC Group’s Legal Woes Continue
Local home health provider, which last year paid the feds $65 million to settle a dispute over its billing practices, now faces a potential class action.
By Leslie Turk
Photo by Robin May
The law office of Scott & Scott, headquartered in Connecticut, is seeking class action certification for a June 13 lawsuit it filed in the U.S. District Court for the Western District of Louisiana alleging securities fraud against Lafayette-based LHC Group. The complaint was filed on behalf of people who bought or acquired the company’s stock from July 30, 2008, to Oct. 26, 2011.
Filed by the City of Omaha Police and Fire Retirement System against LHC Group and Chairman/Chief Executive Officer Keith G. Myers, the suit alleges violations of the Exchange Act, claiming that from July 2008 to October 2011 the company issued false and misleading statements concerning its business and financial prospects. Specifically, the suit claims the defendants failed to disclose that much of the growth in LHC Group’s home-based health care segment was created by the company intentionally increasing the number of Medicare home therapy visits to trigger higher reimbursements. The suit alleges LHC Group manipulated the number of patient visits, “regardless of patient need, to maximize revenue.”
In its June 14 8-K filing, LHC Group acknowledged it is aware of the suit, saying it believes the claims are without merit and intends to vigorously defend the allegations. The company had no further comment.
According to the plaintiff’s press release announcing the suit:
The complaint alleges that the truth began to come to light on May 12, 2010, when LHC announced that the Company received a letter from the Senate Finance Committee asking LHC to respond to questions regarding therapy utilization in prior years. It is alleged that this partial disclosure caused LHC’s stock price to sharply decline, removing some of the stock inflation. Then, following the Company’s July 13, 2010 announcement that it had received a request from the Securities and Exchange Commission to preserve all documents relating to LHC’s Medicare reimbursement practices, the Company’s stock fell further on heavy trading volume. The complaint alleges that this decrease in the price of LHC’s stock was a result of some of the artificial inflation caused by defendants’ misleading statements coming out of the price.
On October 3, 2011, the Senate Committee released a report on its investigation that found that LHC and two other home health care companies engaged in practices that “at best represent abuses of the Medicare home program” and “[a]t worst, they may be examples of for-profit companies defrauding the Medicare home health program at the expense of taxpayers.” That day, the price of LHC shares fell $1.42 per share, or 8.3%, to close at $15.64. Finally, on October 26, 2011, LHC disclosed that the Company was lowering its earnings forecast, in part because of a payment to the federal government to settle an inquiry into whether LHC improperly billed for home health services that were medically unnecessary. On this news, LHC’s stock price fell an additional 15% in a single trading session.
As noted in the June 13 complaint, this federal suit is the latest in a string of problems the company has faced over its billing practices. The settlement with the feds, which ended a civil inquiry involving Medicare reimbursement for home health services from 2006 to 2008, cost the company $65 million.
When it announced the settlement in September 2011, LHC Group said it cooperated fully with investigators. It also said it disputed the government’s claims and maintained that the agreement was neither an admission nor determination of wrongdoing.
LHC Group and its home health competitors have been hit hard by reimbursement cuts and federal investigations into their billing practices. Two days before the June 13 lawsuit was filed, LHC Group announced that it had concluded a strategic review process it launched in November to enhance stockholder value. The company said it has decided to stay the course on its operating plan, including the possibility of repurchasing up to $50 million of its outstanding common stock with cash on hand or borrowings under existing or new debt facilities.
The process, which the company’s board privately agreed to commence shortly after the settlement with the feds, involved an objective review of all of its strategic alternatives, including execution of its operating plan for 2012 through 2016. Such reviews also typically involve the possibility that a company will put itself on the sale block — and they often lead to any number of rumors and speculation about the direction a company may be heading.
In February, to address some of the speculation that had begun to disseminate — company spokesman Jamie Webb says such reviews aren’t typically announced until the end of the process — the home health provider confirmed the review in a public statement and said it had hired J.P. Morgan Securities LLC to advise it on its options.
Citing unnamed sources, Reuters reported in March that private equity firm TPG Capital LP was considering making an offer for LHC Group:
“Private equity makes more sense at this point,” said Kevin Ellich, senior research analyst at Piper Jaffray & Co. “You take the company private and deal with the regulatory and reimbursement headwinds in the next couple of years.”
It’s unclear whether talks between the two entities ever materialized, but LHC Group now says it will stay the course it was on before undertaking the review. As a result of the analysis, its board of directors unanimously decided that the best opportunity to enhance shareholder value is for the company remain an independent public corporation.
“We engaged in this evaluation from a position of strength and, with the assistance of our legal and financial advisers, carefully considered various alternatives,” Myers said in announcing the conclusion of the review process. “This thorough process has affirmed our belief in the long-term value of our company based on our proven ability to grow through our industry-leading model for hospital partnerships, to improve efficiency by leveraging technology and to control overhead costs.”
Twilley returns to LSU
Photo by Robin May
A little more than 22 months after being named vice president for research at UL Lafayette, Dr. Robert Twilley has been named executive director of the Louisiana Sea Grant College Program, an LSU-based program that, according to its website, promotes “stewardship of the state’s coastal resources through a combination of research, education and outreach programs critical to the cultural, economic and environmental health of Louisiana’s coastal zone.”
Between November 2010 and April of this year the respected coastal researcher wore two hats, also serving as the interim CEO of Louisiana Immersive Technologies Enterprise. But he’s no stranger to the Baton Rouge campus: Twilley served as associate vice chancellor for research and economic development at LSU before taking the VP position at UL.
Louisiana Sea Grant is one of 32 programs located in coastal and Great Lakes states and Puerto Rico under the umbrella of the National Sea Grant Program.
“It’s an honor to lead such a distinguished program,” says Twilley in a press release announcing the hire. “Louisiana Sea Grant has accomplished some extraordinary things, from responding to coastal stakeholder needs following devastating hurricanes and the recent oil spill in the Gulf to sponsoring innovative research and nurturing new scholars across the state. This truly is an exciting opportunity for me to continue my passion to promote solutions to living along coastal Louisiana.”
Twilley tells ABiz he owns a condo in Baton Rouge but plans to maintain his Lafayette residence and remain active in the community. — Walter Pierce
Let the Sports Talk Competition Begin
Dyed-in-the-wool Acadiana sports fans now have two listening options in their cars and workplaces.
By Dan McDonald
Delta Media Corp. in Carencro, which operates five radio stations and four low-power television stations, switched formats on the former SNAP 103.7 the morning of June 4. The new entity, known as 103.7 “The Game,” becomes the first 24-hour FM sports talk station in the region and joins traditional outlet Sports Radio ESPN 1420 AM of Lafayette in the genre.
The new station carries national programming from FOX Sports Radio as well as nationally known sports radio personalities Dan Patrick and Jim Rome in its lineup. Its only locally produced show airs from 6-8 a.m. daily with 103.7 Program Director Chris Numan and KLFY-TV weekend sports anchor Jeff Horchak. Delta Media General Manager Chuck Wood says more local programming will join the lineup in the near future.
“I’ve been involved with every sports station that Lafayette’s ever had,” Wood says. “There’s not a day that goes by, whether I’m at the golf course or a UL function or anywhere, that someone doesn’t ask me when we’re going to put sports on FM.”
ESPN 1420/KPEL-AM went to an all-sports format in 1998 and at the time also had only one locally produced daily show: Jay Walker’s “Bird’s Eye View,” which still airs from 3-6 p.m. daily. Since then, ESPN 1420’s local programming has increased to cover most daylight hours, including Steve Peloquin’s “Thinking Out Loud” from 7-9 a.m.; Kevin Foote’s “FooteNotes” from 9-11 a.m.; Billy Ryckman’s “The Sports Note” from 11 a.m.-noon; Walker from 3-6 p.m., and Scott Prather’s “The Great Scott Show” from 6-7 p.m.
“You look at the fact that we do nine hours of local radio every day, and we’ve been doing that for so long, that’s a strength,” says Peloquin, ESPN 1420’s station manager. “We pre-empt a lot of ESPN programming, shows like Mike and Mike, Colin Cowherd and Doug Gottlieb. There’s a reason they’re at ESPN radio, because they’re very good, but our numbers show people want to listen to local radio rather than national. We also try to give them different tastes with all our shows, and I think that’s why people pay attention to us.”
ESPN 1420 is the home station for UL sports play-by-play and aired approximately 170 UL events during the past athletic year, including all football, men’s basketball, baseball and softball games — becoming the first commercial station in the country to air an entire collegiate softball schedule. The station also carries Acadiana High football.
The Game is the new local home of LSU sports, shifting the Tigers from Delta’s 107.1 spot.
The station will also carry St. Thomas More High football, and Wood says The Game plans to add a regular golf show and an on-location football show to its fall lineup.
Wood maintains that the stronger signal on 103.7 (currently 3,000 watts at 1,000 feet) will be a boost to nighttime listeners.
“Music programming is all about morning drive,” he says, “but there’s more listening to this format nationally in the afternoon and evening. Our goal is to put out a quality sports product on a local level that people can listen to 24 hours a day and offer coverage that hasn’t been available before.”
ESPN 1420’s 1,000-watt AM signal covers the Acadiana area during daytime hours but drops off sharply at night. The station supplements its UL coverage by simultaneously broadcasting Ragin’ Cajuns football and men’s basketball on its Townsquare Media sister station Hot 107.9 FM — which has a 100,000-watt signal — and also airs UL baseball on weekends over NewsTalk KPEL-FM 96.5. Townsquare Media operates seven radio stations from its Lafayette studios.
“We have the ESPN name and people recognize that as the leader in sports,” Peloquin says. “People here are used to what we’re doing, plus we’re 14 years old. People know we’re not going anywhere.”
Delta Media launches ‘hot AC’ format
Delta Media Corp., which launched a new sports talk format on June 4, a week later changed the format of 107.1 FM to hot adult contemporary. The new station, MIX 107.1, replaces KOOL 107.1, which played tunes from the ’60s, ’70s and ’80s.
Mix 107.1 plans to compete against long-popular AC station KTDY 99.9 FM and contemporary hit radio station KSMB 94.5 FM, says Chuck Wood, general manager of Delta Media. “The format is designed to sit right between KTDY and KSMB,” Wood explains. “Not as young leaning as KSMB and not as mature leaning as KTDY.” The new station’s target demo is women 25-40 years old, he says.
Wood worked for KTDY’s owner, Townsquare Media, before returning to his old job at the KSMB group of stations in mid-2009. After that group’s owner, Cumulus, let Wood go earlier this year, he joined locally owned Delta Media.
MIX 107.1 includes nationally known personality Kidd Kraddick from 5 a.m. to 10 a.m. “Kidd Kraddick is ranked as one of the most listened-to shows in America,” Delta Media’s Chris Lamke says in announcing the change. “MIX 107.1 will bring his unique star power to Acadiana listeners along with today’s best hits.”
Local personalities Hope Ford — who was doing middays on Snap 103.7 before it switched to 103.7 The Game — will follow from 10 a.m. to 2 p.m. Local personality “T.J.” — Tyler Robicheaux — takes over from 2 p.m. to 7 p.m. Robicheaux was previously with Cumulus, doing afternoon drive on Rock 93.7 FM and weekends on KSMB (known by the on-air name “A.J.”).
National talents Dave Perry and Susan Huber pick up through midnight and 5 a.m., respectively.
MIX 107.1 offers a blend of today’s hottest artists, including Kelly Clarkson, John Mayer, Katy Perry, Nickelback and Gavin DeGraw. The station also offers local news, weather and traffic. “Hot AC has been missing from this market, and Delta Media plans to deliver it to those wanting today’s best hits without any offensive programming or songs,” Wood says.
Carencro-based Delta Media Corp. owns five radio stations and four TV stations. — Leslie Turk
Catching up With: Julie Kelley
You can take the girl out of Cajun Country, but, well, you know.
Television news anchor Julie Kelley is still at ABC affiliate TV3, only this TV3 is in metro Washington, D.C., not Lafayette where she spent a decade as a reporter and anchor at KATC. The 38-year-old Vermont native, who graduated from Syracuse’s Newhouse School of Public Communications in 1996, met her Cajun husband when she was covering a story during her first TV reporting job in Upstate New York. New Iberia native Mac Mire was in the Coast Guard at the time and, as Julie recalls it, informed his mother soon after meeting her that he was going to marry that Yankee girl. Julie says Mac’s Cajun cooking is what reeled her in.
We caught up with Julie recently via Facebook and email. She’s been away from Lafayette for nearly three years now, but South Louisiana is never far from her heart.
ABiz: Tell us more about your life in the D.C. area.
JK: We live in Winchester, Va., a hidden gem near Shenandoah National Park about an hour outside of Washington, D.C. I am a 6 p.m. and 11 p.m. anchor for TV3 Winchester, an ABC affiliate covering a small section of the Washington, D.C., market.
I have become a dedicated yogi in my time here. I practice yoga about five times a week. I also love enjoying the mountains around here. We’ve hiked parts of the Appalachian Trail and biked trails along the Potomac River. Our next bike trip is a 30-mile ride into Harpers Ferry — I can’t wait. I’m also the second baseman (and not a bad hitter) for my TV3 softball team.
And in the fall, we spend our Saturdays and Sundays cooking and watching football (cheering on LSU, the Cajuns and the Saints). Well, truth be told, Mac does the cooking; I sit in a big chair in the kitchen and keep him company.
ABiz: What do you miss the most about living in Louisiana?
JK: Our family and friends.
I’ll never forget my first crawfish boil. I actually asked for melted butter. (Right, such a Yankee.) Now, I wouldn’t eat it without my mayo/ketchup mixture.
We were back recently to mourn the loss of Mac’s dad, our Pop, and one of my favorite people in the world. I’ll miss walking through the door and hearing him say, “Whatcha know?” It’s how he greeted us — with a big hug, too.
Every time I say “boo” or “come see” to someone in the newsroom, I am reminded how much of Louisiana got into this Vermont girl’s heart.
ABiz: What’s the best thing about living in Virginia?
JK: I get to spend lots of time with my family. In fact, I wish my mom and dad would just move in; I enjoy seeing them so much. We’re also within driving distance of all three of my older brothers.
ABiz: What are the most satisfying and frustrating aspects of television news broadcasting?
JK: I have so much fun with the people I work with. Many of them are just starting out and I love to see how quickly they become good journalists. They’ve taught me so much about enjoying life, and I’m definitely cheering them on all the way.
I always tell our other anchor that I don’t like logistics. My mind wants to be creative — I can’t wait to talk about story ideas, how to tell great stories and being live during breaking news and weather on the air. I’d rather not think about what car a reporter is in or who has what equipment. Thank goodness other people around here are good at that.
ABiz: If you could change one thing about yourself, what would it be?
JK: I would listen more and worry less.
I keep a prayer next to my bed my grandmother wrote down and it is all about not worrying about tomorrow — that God will provide what we need or provide the strength to handle whatever comes our way. I believe it, but sometimes I just need a reminder.
ABiz: Other than Mac’s family, do you keep up with anyone from Lafayette?
JK: One of my dearest friends, Tonya Lacoste, started out at KATC soon after me. Tonya has seen me through so much and she will always be one of my dearest and treasured friends.
Liz Robichaux, a former KATC producer and Jamie Angelle, a former KATC assignment editor, both live in the DC area. We went to a BBQ with them last weekend.
And, thank goodness for Facebook, because I get to keep up with many more people from my Louisiana days.
ABiz: What are your career and life goals?
JK: I want to continue my work as a journalist on television and online and also start a family. It’s time to share all this love and fun with some little ones.
ABiz: Why broadcasting?
JK: I loved writing and listening to people’s stories. I almost went to Tulane University in New Orleans — I loved everything about Louisiana even back when I was 17. But, when I visited Syracuse (it was raining, of course) and saw that college TV studio, I knew I had to do it.
My brothers will tell you I also like being the center of attention.
ABiz: If you weren’t an anchor, what would you be doing?
JK: I can’t think of anything else that would be as much fun and so rewarding.
Romacelli takes over Marcello’s spot in BR
Romacelli, the Lafayette-based Italian/Mediterranean concept with restaurants in River Ranch and Sugar Mill Pond, is taking over the space occupied by Gene Todaro’s Enoteca Marcello’s Wine Bar & Café on Perkins Road in Baton Rouge. Romacelli assumed Todaro’s lease June 13, at which time the restaurant closed.
“It went from us being open to them taking over,” Todaro says, calling the deal a “good opportunity” for both parties.
Stuart Ottinger, corporate manager for Double R Restaurant Group of Lafayette, says minor décor changes are under way, with an expected opening in mid-July. The restaurant is located at 4205 Perkins Road, between College Drive and Acadian Thruway.
Double R Restaurant Group, owned by Lafayette’s Rodney Savoy and longtime business partner Robert Gagnard of San Diego, is also the franchisee for Another Broken Egg, which opened a Baton Rouge store late last year in the former site of Harold’s clothing store in Citiplace. Ottinger says the group has signed a letter of intent for a second Baton Rouge location and also has signed an LOI in New Orleans. Another Broken Egg previously operated in the Capital City but shut down its two stores — one of them reopened under a new name but closed after the franchisee was sued for violating a non-compete clause and allegedly using trade secrets, according to 225 magazine.
Along with Robert Daigle, Savoy and Gagnard developed River Ranch and Sugar Mill Pond. The duo’s Double R Restaurant Group, which does not own the Lafayette location of Another Broken Egg, also has been expanding the breakfast/lunch concept in North Carolina and Atlanta, Ottinger says. –– Leslie Turk
MidSouth doubles BR footprint
Lafayette-based MidSouth Bank announced June 12 the acquisition of two new bank locations in Baton Rouge, a move that, subject to regulatory approval, will double MidSouth’s presence in the capital. The bank purchased the former Hancock branch on Sherwood Forest Boulevard and the former Whitney branch on Jones Creek Road. MidSouth hopes to reopen those locations in September and October, respectively.
“These former Hancock and Whitney locations are a perfect distance from our two existing banking centers, allowing us to expand both our commercial and consumer reach in the Baton Rouge market,” says MidSouth Bank Regional President Paul Judice in a press release announcing the acquisitions. “The investment in these two locations will support our future growth in Baton Rouge and into surrounding parishes, while providing more convenience for our existing customers.”
Along with a branch in Carencro expected to open this month, the Baton Rouge acquisitions will expand to 43 the number of MidSouth banking centers operating in Louisiana and Texas.
Poll says La. small businesses support health exchange
Six out of every 10 business owners surveyed in Louisiana say they support the creation of a state-run health care exchange to increase options for insuring employees and pool purchasing power through a virtual health insurance hub.
On June 14, the Small Business Majority, an advocacy group for small businesses, released the results of a survey of small businesses in Louisiana that gauges opinions on the federal Affordable Care Act, the legality of which is currently being heard by the U.S. Supreme Court.
Of the business owners polled (those with 100 or fewer employees), 58 percent responded that they would consider using a state-run health care exchange for finding health care coverage for their employees:
One of the law’s crucial components, which has tremendous small business support, is the health insurance exchange — an online marketplace where small business owners will be able to pool their buying power when they purchase coverage. By a 6:1 ratio, owners say they would use their state exchange or at least consider using it, compared to those who say they would not consider using it when they provide benefits. The majority of entrepreneurs find specific features of the exchange very appealing, and 6 in 10 support Louisiana applying for federal funds to set one up.
State-run health care exchanges are a key provision of the federal health care law, and Louisiana is one of only a few states in the country that hasn’t yet agreed to establish the online health care resource on its own before the feds step in. Gov. Bobby Jindal and his Health Secretary Bruce Greenstein are adamantly opposed to the idea. — Heather Miller