June 30, 1995
Securities and Exchange Commission
Operations Center
6432 General Green Way
Alexandria, Virginia 22312-2413
Attn: Filer Support
Gentlemen:
Enclosed please find the Edgar Filing of the Form 8-K for
Geriatric
& Medical Companies, Inc.
We are maintaining an executed copy of the document in our
files.
Very truly yours,
GERIATRIC & MEDICAL COMPANIES, INC.
James J. O'Malley
Vice President and
Chief Financial Officer
JJM\amt
Enclosure<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (date of earliest event reported) May 19, 1995
Geriatric & Medical Companies, Inc.
Exact name of registrant as specified in its charter
Delaware 0-3997 23-1713341
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
5601 Chestnut Street, Philadelphia, Pennsylvania 19139
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code(215) 476-2250
_________________________________________________________________
(Former name or former address, if changed since last report)
ITEM 5. Other Events
The following items were previously reported by the Company
and are updated as described herein:
Verdict in Class Action Suit
Geriatric & Medical Companies, Inc. (the "Company") was
named a defendant, together with GMS Management, Inc., and
various current and former officers of the Company, in a class
action suit which was filed in September, 1992, in the United
States District Court for the Eastern District of Pennsylvania in
Philadelphia. The plaintiff class alleged that, among other
things, various reports and press releases issued by the Company
misrepresented or omitted adverse material facts concerning
various matters relating to the Company and its affairs. The
plaintiff class did not seek a specified sum other than "to pay
to plaintiff and to all members of the class damages in an amount
to be proven at trial, with interest thereon." The jury returned
a verdict on Friday, June 9, 1995, resulting in no liability on
five of the six alleged misrepresentations or omissions set forth
in the plaintiff's complaint. The jury found in favor of the
plaintiff class with respect to the remaining alleged omission
relating to the criminal investigation conducted by the
Pennsylvania Attorney General, and awarded $.20 per share in
damages for each share of the Company's common stock purchased by
a class member during the period March 1, 1992 to September 2,
1992. The Company believes that damages in the aggregate,
calculated pursuant to the jury's verdict, will not exceed
$350,000, exclusive of costs and other charges which may apply.
LSA - Suspension of Payment of Medicare Receivables
Life Support Ambulance, Inc. ("LSA"), a subsidiary of the
Company, received a notice of suspension of payments relating to
Medicare billings submitted by LSA to its Medicare intermediary
effective April 6, 1995. The suspension was imposed because the
intermediary had received evidence that prior payments made to
LSA may not have been billed correctly. The intermediary has not
yet quantified the nature of the alleged deficiency in billing
procedures nor the amount for which LSA may have improperly
billed Medicare. LSA has retained an expert to review its
Medicare billing procedures. LSA's expert has preliminarily
determined that while LSA may have incorrectly billed certain
charges to Medicare, LSA may also have erroneously failed to bill
Medicare for certain reimbursable items. At the present time the
net effect of such billing inconsistencies is unclear. In light
of the foregoing, LSA has initiated discussions with the
intermediary which would allow for the payment of currently
billed Medicare reimbursements while past billing and
reimbursement issues are resolved. LSA believes that it has
operated, at all times, in substantial compliance with all
provisions required by Medicare relating to reimbursement for
services. It is not possible to determine at the present time
the length of the suspension or whether such suspension will have
a material adverse effect on the operations or the financial
condition of the Company.
Status of Negotiations of Sale-Lease Back Arrangement with
National Century Financial Enterprises, Inc.
Certain of the Company's subsidiaries, including LSA, have
been negotiating a $7 million financing arrangement with National
Century Financial Enterprises, Inc. ("NCFE"). A portion of this
financing ($5 million) has been structured as a sale-lease back
pursuant to which such subsidiaries would sell certain assets to
NCFE and lease back such assets through GMC Leasing Corp., a
subsidiary of the Company, through an agency agreement. While
the form of agency agreement has not yet been approved by NCFE,
the remaining documentation relating to this transaction has been
substantially completed. NCFE has advised the Company that it
is unwilling to consummate the proposed transaction at the
present time due to, among other things, the suspension of
Medicare payments to LSA. (See "LSA - Suspension of Payment of
Medicare Receivables," supra). The Company has no reason to
believe that NCFE would be unwilling to close this transaction
upon a favorable resolution of Medicare's inquiry with respect to
LSA's billing procedures. The Company can not predict whether,
or at what time, this transaction will be concluded.
The following items have occurred since the date of the
Company's most recent report on Form 10-Q, and, accordingly, are
being reported herein, as follows:
Suspension of Financing Relating to LSA Receivables
In addition, certain of the Company's subsidiaries (the
"Operating Subsidiaries") are engaged in a financing arrangement
through National Premier Financial ("NPF"), an affiliate of NCFE.
NPF has established a number of pools which purchase the right to
collect receivables from health care providers. The Operating
Subsidiaries have assigned their respective rights to collect
receivables to a pool affiliated with NPF (the "Pool"). By
letter dated June 16, 1995, the Pool notified the Company that,
due to the suspension of Medicare payments to LSA (See "LSA -
Suspension of Payment of Medicare Receivables," supra), it has
ceased purchasing the right to collect certain of LSA's
receivables effective as of June 20, 1995. The Pool continues to
purchase all of the other eligible receivables attributed to the
Operating Subsidiaries. The Company presently can not determine
whether the Pool's suspension will have a material adverse effect
on the Company taken as a whole. The Company has no reason to
believe that the Pool would be unwilling to purchase the right to
collect LSA's eligible receivables upon a favorable resolution of
Medicare's inquiry into LSA's billing procedures. The Company can
not predict when the Pool will resume purchasing the right to
collect LSA's eligible receivables.
Allegations Relating to Tucker House
On May 19, 1995, the U.S. Attorney for the Eastern District
of the Pennsylvania delivered a draft complaint to the Company
which alleges that Healthcare Hospitality Services, Inc. ("HHS"),
a subsidiary of the Company, failed to recommend adequate
nutritional requirements to three residents of Tucker House, a
nursing home facility previously managed by another subsidiary of
the Company. The draft complaint contains a further allegation
that HHS billed Medicare and state assistance programs for
reimbursement for nutritional services which were not provided to
such residents. The U.S Attorney has invited the Company to
discuss a possible resolution of this matter before the filing of
such complaint in federal district court. The Company has had
preliminary discussions with the U.S. Attorney and believes that
this matter may be settled prior to the filing of such complaint
by the payment of an as of yet unspecified amount, with no
admission of wrongdoing. Although the outcome of this matter can
not be predicted, the Company denies any wrongdoing and is
prepared to vigorously defend this action should the complaint be
filed. The Company's management agreement with Tucker House
provides that Tucker House indemnify and hold the Company
harmless with respect to claims such as that alleged by the U.S.
Attorney. However, it is unclear whether Tucker House has or
would have the funds necessary to provide such indemnification.
On or about June 6, 1995, an officer of HHS was served with
a subpoena issued by the Attorney General of the Commonwealth of
Pennsylvania, relating to the nutritional care provided to
residents of Tucker House. It is the belief of counsel for the
Company that such subpoena results from the same facts
surrounding the operations of Tucker House as are alleged in the
draft complaint delivered to the Company by the U.S. Attorney.
At the present time, it is unclear as to what action, if any, the
state Attorney General intends to take with respect to the
Company's management of and other involvement with Tucker House.
Lawsuit Filed Against the Company
On May 25, 1995, the Company was named as a defendant in a
lawsuit filed by an elderly female nursing home patient. Also
named as defendants were certain of the Company's subsidiaries.
The events giving rise to the action allegedly occurred during
the time that the plaintiff was residing at Mayo Nursing Home and
Convalescent Center. Ordinarily, this is not the type of lawsuit
that the Company would disclose in a report on Form 8-K; however,
plaintiff's counsel has circulated a press release which has
garnered some publicity. As a result, the Company has chosen to
utilize this Form 8-K to state that plaintiff's claim is one of a
type which is not unusual given the Company's lines of business,
that the Company believes that there is no merit to the
plaintiff's allegations and that the Company has referred this
matter to its insurance carrier for defense. At the present
time, the Company is unable to determine the ultimate outcome of
this case with any degree of certainty.
Other
The Company is involved in various routine government
inquiries, audit surveys and administrative proceedings
concerning its activities and operations. The Company is also
involved in various claims and legal proceedings arising in the
ordinary course of business. The Company believes that the
ultimate disposition of these matters in the aggregate will not
have a material adverse effect on the Company taken as a whole.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
GERIATRIC & MEDICAL COMPANIES, INC.
By:/s/James J. O'Malley
James J. O'Malley
Chief Financial Officer
