U.S. Attorney Ends One Inquiry Into Apria Healthcare

Apria Healthcare Group Inc., one of the biggest U.S. home health-care providers, said Thursday that federal prosecutors have closed a criminal investigation of its billing practices without filing charges.

Apria said a year ago that the U.S. attorney’s office in Sacramento had served the company with six subpoenas for information related to its billing practices. Apria said then that it had no reason to believe it had done anything wrong. The U.S. attorney’s office later served it with two more subpoenas.

The Costa Mesa company said Thursday that the U.S. attorney’s office has closed the investigation file related to the eight subpoenas.

Analysts said the closure should help reassure investors that the company, which has been benefiting from a cost-cutting program, is on the right track.

“Unfortunately, the issuance of subpoenas is part of doing business in the health-care segment,” said John Sullivan, an analyst at Tucker Cleary Capital Markets with a “strong buy” rating on Apria.

“Now that the dust is settling on this issue, the company can focus on continuing to improve its operations, and I think that investors will continue to be very pleasantly surprised by the company’s ability to do that,” Sullivan said.

Apria is still dealing with other legal challenges.

Apria has been the subject of two subpoenas by the U.S. attorney’s office in San Diego seeking information on its billing practices. Apria also is now responding to a subpoena from the U.S. Department of Health and Human Services.

The company’s stock moved up 11%, or $1.88 a share, to $18.88.

Apria, like several other home-health companies, was hurt by cuts in payments from Medicare, the government health plan for the elderly, for home oxygen therapy. The cuts, mandated by the 1997 balanced-budget act, reduced Medicare payments for home oxygen therapy by about 25% last year.

In April, however, the company said it had exceeded first-quarter profit estimates as a cost-cutting plan, under which Apria left some unprofitable markets and fired some employees, started to show results.

Apria, which had been expected by analysts to earn 22 cents a share, posted first-quarter net income of $15.6 million, or 30 cents a share, compared with a year-ago loss of $6.6 million, or 13 cents.