NEW BRAUNFELS, Texas – A company that sells wheelchairs and motorized scooters announced Friday that it’s shutting down for good after federal scrutiny over alleged Medicare and Medicaid fraud that led to a bankruptcy filing.
The Scooter Store plans to phase out operations and furlough its remaining 370 employees and managers, the San Antonio Express-Newsreported, citing a company statement. About 200 of those jobs are in the company headquarters, with the rest at 55 distribution centers around the nation.
The decision came from the New Braunfels, Texas-based company’s board of directors, according to the statement.
A message left with the company by The Associated Press was not immediately returned Friday night. The company website bears only a statement that the company was undergoing “a business revitalization intended to sharpen its focus on meeting its customer’s most critical needs, efficiently and in partnership with government and mobility industry expectations.”
The U.S. Centers for Medicare and Medicaid Services notified the company recently that the company is losing its federal contract for reimbursement of the sale of its products, effective Oct. 26, according to the statement sent to the Express-News. The federal decision “effectively eliminates” its ability to sell its assets in a Chapter 11 reorganization, so it will liquidate, the company said.
In December, two U.S. senators questioned why The Scooter Store, the nation’s biggest seller of mobility scooters, had received as much as $87.7 million in Medicare overpayments. They questioned whether TV ads by The Scooter Store and a rival company target people who don’t need scooters, leading to hundreds of millions of dollars in unnecessary Medicare spending.
On Feb. 20, dozens of law officers raided the company headquarters in New Braunfels. The city later sued The Scooter Store to get back more than $2.6 million in job-creation incentives awarded to the company. The Scooter Store filed for Chapter 11 bankruptcy protection in April.