Alere Faces Criminal Probe Over Medicare, Medicaid Billing -- Update
July 27 2016 - 5:14PM
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 last month 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.
An Alere spokeswoman had no immediate comment. 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% on news of the probe, first reported by
The Wall Street Journal on Wednesday afternoon. Alere shares now
trade more than 40% below Abbott's $56-a-share offer, suggesting
investors are nervous the deal may fall apart.
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. Last week, a shareholder
lawsuit was filed over 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 27, 2016 16:59 ET (20:59 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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