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)
February 12, 1996
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:
Status of Class Action Suit
On February 12, 1996, the Company received the decision of Judge
John Fullam, U.S. District Court, Eastern District of Pennsylvania
pertaining to post-trial motions filed by both sides in this
litigation. In the Judge's ruling, the verdict finding no liability
on the part of the Company on five of the six alleged
misrepresentations was upheld. The Judge's ruling granted relief
limited to the issue of damages against all defendants on the sole
remaining count, as well as the liability of one former officer and
one current officer of the Company. With respect to the issue of
damages, the retrial is limited solely to purchases of Company
stock during the period March 1, 1992 through and including
September 2, 1992 (maximum of approximately 1,700,000 shares). The
Company has commenced discussions with the directors' and officers'
insurance carrier to determine the carrier's responsibility with
respect to the costs and expenses of the new trial and any ultimate
judgment rendered. The new trial has been scheduled for April 8,
1996.
Allegations Relating to Tucker House
On February 21, 1996, GMS Management-Tucker, Inc., the subsidiary
of the Company which previously managed Tucker House, entered into
an agreement, as party to a settlement to end civil litigation
brought against the owner of Tucker House and GMS Management-
Tucker, Inc. for submission of claims to the Medicaid program for
alleged inadequate medical intervention for three former residents
of Tucker House who had been identified by GMS Manaagement-Tucker,
Inc. as nutritionally at risk. GMS Management-Tucker, Inc.
believes that it properly advised the owner on the submission of
those claims, that it properly assessed, evaluated and recommended
appropriate nutritional interventions for those three residents and
that appropriate medical, dietary and nursing care was provided to
support the claims, but nonetheless determined to settle this civil
matter to avoid the substantial expense and management disruption
of litigation.
In the agreement with the United States Attorney, the Company has
agreed to participate and fund a joint study with the University of
Pennsylvania's Institute on Aging and embark on what the Company
believes is a first of its kind cooperative effort between
government, the academic community, and the private sector, to
describe the role of physicians, dietitians, hospitals and care
staff in those cases where nursing home residents are nutritionally
at risk and need acute medical intervention to prevent and/or treat
skin breakdowns. As part of this cooperative effort, data will be
collected from various facilities owned by the Company pertaining
to the Company's existing policies and procedures for identifying,
assessing and evaluating those residents who may be nutritionally
at risk. In the Agreement (a copy of which is attached), the
Company has agreed to pay the United States Government $575,000
payable over 30 months without interest. The Company expects that
the net effect of this settlement on the anticipated earnings of
the Company will be offset by recent efficiencies, cost
containments, and improved operations. As previously reported, the
Company believes the responsibility for the matters described in
the civil litigation lies with the owner of the facility and the
Company is presently exploring its options concerning its rights of
indemnification against the owner.
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
February 21, 1996
DATE<PAGE>
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
UNITED STATES OF AMERICA,
Plaintiff,
v. CIVIL ACTION
NO. 96-
GMS MANAGEMENT-TUCKER, INC.;
TUCKER HOUSE II, INC.
Defendants.
CONSENT ORDER
The United States of America ("United States") and Defendant GMS
Management-Tucker, Inc. have consented to the issuance of the
following order subject to the approval of the Court:
NOW THEREFORE, IT IS HEREBY ORDERED THAT:
Jurisdiction and Venue
1. The United States, GMS Management-Tucker, Inc. and Geriatric
& Medical Companies, Inc. agree that this Court has jurisdiction
pursuant to 28 U.S.C.A. 1331, 1345 and 31 U.S.C.A. 3729;
that venue lies in this judicial district pursuant to 28 U.S.C.A.
1391 (b) and (c); and that they will be bound by the terms of
this Consent Order.
Factual Background
2. On or about November 1989, Tucker House II, Inc. hired GMS
Management-Tucker, Inc. for the purpose of, inter alia,
supervising and directing patient care services for residents of
Tucker House Nursing Home, 1001 Wallace Street, Philadelphia,
Pennsylvania. In addition, Tucker House II, Inc. contracted with
GMS Management-Tucker, Inc. to provide dietary services at the
nursing home facility which included, "but were not limited to,
supervision of those services in accordance with the applicable
federal, state and local laws, rules and regulations, and in
compliance with certain dietary standards of operation as
required for participation in the federal Medicare Program and
Pennsylvania Medicaid Program."
3. Claims for services rendered to residents at Tucker House
Nursing Home were submitted to the Government. GMS Management-
Tucker Inc. alleges that it was under the direction of the Tucker
House Board of Directors while providing services pursuant to the
agreement described in paragraph two and that claims for services
rendered to residents at Tucker House Nursing Home were submitted
with the Tucker House Board of Director's approval.
4. The Government alleges that Tucker House II, Inc. and GMS
Management-Tucker, Inc. submitted, or caused to be submitted,
claims for services rendered to residents of the Tucker House
Nursing Home in deliberate ignorance of the truth and/or reckless
disregard of the truth in the creation and/or submission of those
very same claims regarding the failure to provide adequate
nutrition in accordance with state and federal law and
regulations.
5. GMS Management-Tucker, Inc. believes that the claims
submitted to the Government for services rendered to residents at
Tucker House Nursing Home were appropriate and expressly denies
any wrongdoing or liability in connection with those claims. To
avoid the expense, burden and uncertainty of litigation, however,
GMS Management-Tucker, Inc. has agreed to settle this matter.
GMS Management-Tucker, Inc.'s agreement to the entry of this
Consent Order does not constitute an admission of wrongdoing or
liability, nor does it effect, waive, defeat, or diminish in any
way claims that Geriatric & Medical Companies, Inc., or any of
its affiliates or subsidiaries, may have against any other party.
The entry of this Consent Order does not constitute an
adjudication of any legal issue.
6. Payment. Geriatric & Medical Companies, Inc. agrees, on
behalf of its subsidiary, GMS Management-Tucker, Inc., to pay the
sum of FIVE HUNDRED SEVENTY-FIVE THOUSAND DOLLARS ($575,000.00)
to the United States in settlement of this action. Payment of
this amount to the United States Attorney's Office, 615 Chestnut
Street, Suite 1250, Philadelphia, PA 19106, Attn.: David R.
Hoffman, is to be made as follows:
a) upon the execution of this Consent Order by all parties,
Geriatric & Medical Companies, Inc. shall remit the amount
of TEN THOUSAND DOLLARS ($10,000.00);
b) Geriatric & Medical Companies, Inc. shall remit the amount
of TEN THOUSAND DOLLARS ($10,000.00) per month beginning on
the first day of the first month after this Consent Order is
executed by all parties, and continuing until October 30, 1997;
c) Geriatric & Medical Companies, Inc. shall remit the amount
of FORTY THOUSAND DOLLARS ($40,000.00) per month from
November 1, 1997 until the total amount of FIVE HUNDRED
SEVENTY-FIVE THOUSAND DOLLARS ($575,000.00) is fully paid.
7. Nutritional Standards. Geriatric & Medical Companies, Inc.
and all of its subsidiaries, employees, contractors, and/or
subcontractors further agree to comply with the Policies and
Procedures attached hereto and incorporated herein as Exhibit A.
These Policies and Procedures -- which were developed by
Geriatric & Medical Companies, Inc. prior to this action and
which may be updated as required by government regulation and/or
changing industry standards -- require, inter alia:
a) calculation by Registered Dietitians or Registered Diet
Technicians of residents' ideal body weight and comparing
the current body weight to the usual body weight as outlined
in nutritional documentation guidelines to determine an
appropriate healthy weight range for each resident (See,
e.g., Policy Number 502: Ideal Body Weight Calculation and
Policy Number 505: Ideal Body Weight for Residents with
Amputations);
b) identification of residents as "nutritionally at risk" and
"nutritionally compromised" (See, e.g., Draft Policy:
Nutrition Risk Screen; Policy Number 500: Nutritional
Documentation Guidelines; Policy Number 501: Dietitians
Documentation Record; Policy Number 506: Weight Gain or
Loss; Policy Number 508: Intake Monitoring for Residents at
or Potential for Nutritional Risk; Policy Number 513:
Identification of Residents at Nutritional Risk; Policy
Number 600: Minimum Data Set; Policy Number 603:
Interdisciplinary Plan of Care);
c) monitoring serum albumin levels for residents (See, e.g.,
Policy Number 507: Decubitus Ulcers; Policy Number 512:
Pressure Ulcer Nutritional Intervention; Policy Number 513:
Identification of Resident at Nutritional Risk);
d) safeguards to ensure that residents are not malnourished
(See, e.g., Draft Policy: Nutrition Risk Screen; Policy
Number 500: Nutritional Documentation Guidelines; Policy
Number 513: Identification of Resident at Nutritional Risk;
Policy Number 600: Minimum Data Set; Policy Number 601:
Care Conference; Policy Number 603: Interdisciplinary Plan
of Care);
e) provision of wound care (decubitus ulcer) treatment that
meets or exceeds the Agency for Health Care Policy and
Research Guidelines, attached hereto and incorporated herein
as Exhibit B (See, e.g., Policy Number 507: Decubitus
Ulcers; Policy Number 512: Pressure Ulcer Nutritional
Intervention); and
f) measures to prevent residents from improperly, medically
unjustifiably or involuntarily being given feeding tubes for
nutritional purposes (See, e.g., Policy Number 511:
Physician Nutritional Recommendations; Policy Number 603:
Interdisciplinary Plan of Care; Policy Number 700:
Candidates for Supplemental Feedings; Policy Number 702:
Tube Feeding: Weaning).
8. Corporate Compliance Program. Geriatric & Medical
Companies, Inc. further agrees to adopt the Corporate Compliance
Program attached hereto and incorporated herein as Exhibit C.
The United States understands that the Compliance Program for
Geriatric & Medical Companies, Inc. and its subsidiaries is
currently under development. Exhibit C includes the overall
corporate structure for this Compliance Program, along with the
component that relates specifically to the Geriatric & Medical
Companies, Inc. subsidiary that provides contract management
services including dietary, housekeeping, laundry, pest control,
plant operations and facilities management services to nursing
homes, personal care facilities, and retirement communities. The
United States has reviewed and approved the portions of the
Compliance Program attached as Exhibit C. The United States
understands that Geriatric and Medical Companies, Inc. will add
additional components to its overall Compliance Program and the
United States reserves the right to review and approve the
component related to Geriatric and Medical Services, Inc., or its
corporate successor or assign, which approval will not be
unreasonably withheld. The Corporate Compliance Program supports
Geriatric & Medical Companies, Inc.'s efforts at full compliance
with all applicable laws, rules and regulations governing the
Medicare and Medicaid Programs and the Nursing Home Reform Act.
9. Training. Geriatric & Medical Companies and all of its
subsidiaries agree to provide training to all appropriate staff,
as follows:
a) Nutritional Standards. Geriatric and Medical Companies,
Inc. will formally train the Dietitians and Diet Technicians
responsible for carrying out the Policies and Procedures
described in Paragraph 7. This training will consist of at
least ten (10) hours of instruction per year, spread over at
least two (2) sessions. The training will include
instruction on the Agency for Health Care Policy and
Research Guidelines related to the treatment of decubitus
ulcers, along with other appropriate topics;
b) Corporate Compliance Program. Geriatric and Medical
Companies, Inc. will train each of its employees on the
Corporate Compliance Program, after its completion and
adoption. See Exhibit C (setting forth the Corporate
Compliance Program's training requirements). The initial
compliance training will regularly be supplemented with
additional training sessions related to particular
compliance issues. In addition, all new employees will be
trained on the Corporate Compliance Program at the time of
their initial orientation.
10. Reporting on Nutritionally At Risk Patients. Geriatric &
Medical Companies, Inc. and all of its subsidiaries agree to
report to its Corporate Clinical Coordinator all residents
defined as nutritionally compromised or nutritionally at risk, in
accordance with the provisions of the Policies and Procedures
described in Paragraph 7 (See, e.g., Policy Number 513:
Identification of Residents at Nutritional Risk). A copy of the
monthly "Identification of Residents at Nutritional Risk" report
will be available for review, upon request, by the United States
Attorney's Office for a period of not less than one (1) year from
the entry of this Consent Order. Requested materials will be
provided within forty-eight (48) hours of the United States
Attorney's request. Upon conclusion of the initial one (1) year
period, the United States will determine the necessity for,
frequency and duration of continued review. In no event,
however, will Geriatric & Medical Companies, Inc.'s obligation to
make these reports available to the United States extend beyond
July 1, 1998. Review of the "Identification of Residents at
Nutritional Risk" report by government agencies does not
constitute approval or disapproval of the care provided by
Geriatric and Medical Companies, Inc.; nor does it supersede or
alter any government agency's ability otherwise to review or
survey the care provided by Geriatric and Medical Companies, Inc.
The United States reserves its right to take any action, in any
forum, against Geriatric & Medical Companies, Inc. and all of its
subsidiaries for failing to provide resident care in accordance
with all applicable rules and regulations. Geriatric & Medical
Companies, Inc. and its subsidiaries reserve the right to defend
against any action taken by the United States, or any other
party, and to assert counterclaims and/or defenses in any such
action.
11. Joint Effort to Develop Innovative Approaches to Improving
the Nutritional Status of Nursing Home Residents. Both parties
agree that innovative approaches and experimentation are needed
to improve the nutritional health of America's nursing home
residents and that particular attention should be focused in two
areas: the refinement of nutrition risk assessment screens so
that individuals who are at risk of clinical complications from
nutritional decline are identified at the earliest possible time;
and, the improvement of communication, coordination and clinical
practices among those responsible for the nutritional health of
nursing home residents, including physicians, hospitals, nurses,
nursing home administrators, dietitians, nursing home residents
and their families.
Geriatric & Medical Companies, Inc. has entered into a joint
effort with the University of Pennsylvania's Institute on Aging
to address these critical concerns. Pursuant to this joint
effort, Geriatric & Medical Companies, Inc. and its subsidiaries,
have invited specialists (including a geriatrician and a
geriatric nurse practitioner) from the University of
Pennsylvania's Institute on Aging (the "Specialists") to use data
obtained from its nursing homes for the improvement of the
nutritional status of nursing home residents.
In cooperation with Geriatric & Medical Companies, Inc.'s
professionals, the Specialists will evaluate a nutrition risk
assessment screening tool that will provide for the earliest
possible identification of residents at risk of clinical
nutritional decline. The information gathered will, in addition,
be used to suggest ways to improve communication, coordination
and clinical practice among the physicians, hospitals, nurses,
nursing home administrators and dietitians who jointly provide
nutritional management services for nursing home residents.
The Specialists will analyze the overall nutritional health of
residents at the nursing homes, review charts, personally
interact with the residents and, in order to better understand
and improve the communication, coordination and clinical
practices among those responsible for the residents' overall
nutritional health, interact with attending physicians, hospital
staff, the nursing home staff and the residents' families. For a
one (1) year period after entry of this Consent Order, the
Specialists will visit a maximum of seven (7) selected facilities
at least quarterly, on whatever schedule they deem appropriate.
After the one year period, Geriatric & Medical Companies, Inc.
and the Specialists will jointly decide whether to continue with
the project. Geriatric & Medical Companies, Inc. will provide
the Specialists with immediate access to nursing home residents
and their records, subject to the resident's rights under the
Nursing Home Reform Act.
After each quarterly visit, the Specialists will document any
adverse findings relating to nutrition and wound care and will
present Geriatric & Medical Companies, Inc. with a report within
ten (10) calendar days. The Specialists will provide a copy of
this report to the United States Attorney's Office. Geriatric &
Medical Companies, Inc. has agreed to provide a maximum of
Thirty-Five Thousand Dollars ($35,000.00) toward the cost of this
program during its initial one (1) year period. The Specialists
will provide periodic invoices describing their progress to the
United States Attorneys' Office. Geriatric & Medical Companies,
Inc. will pay the Specialists' invoices, up to the maximum
described above, within thirty (30) days of their receipt.
12. Letters to Residents' Families. Geriatric & Medical
Companies, Inc. agrees to send a mutually acceptable letter to
the families of the residents mentioned in the Complaint.
13. Remedies Upon Default. In the event that the United States
determines that Geriatric & Medical Companies, Inc. and/or any of
its subsidiaries, employees, contractors and subcontractors fail
to comply in good faith with the terms of this Consent Order or
should any of Geriatric & Medical Companies, Inc. representations
or warrants be materially false, the United States may, pursuant
to the provisions of Paragraph 14, at its sole discretion,
exercise one or more of the following rights:
a) seek contempt of court based on the failure of Geriatric &
Medical Companies, Inc. and its subsidiaries, employees,
contractors and subcontractors to comply with this Consent Order.
Geriatric & Medical Companies, Inc. and the United States agree
that, as one of its available remedies, the court may impose,
after a finding of civil contempt, a penalty of ten thousand
dollars ($10,000) per day, beginning upon the finding of contempt
and lasting until all defaults are cured. After curing all
defaults, Geriatric & Medical Companies, Inc. may petition the
court to lift its contempt order.
b) exercise any other right granted by law or recognizable at
common law or equity.
14. Notice of Default; Time for Cure. In the event that the
United States believes that Geriatric and Medical Companies,
Inc., or any of its subsidiaries, is in default of the terms of
this Consent Order, the United States, except as provided in
Paragraph 15, prior to exercising any of its remedies listed in
Paragraph 13, will notify Geriatric and Medical Companies, Inc.
of the alleged default, in writing, as follows (the person(s) to
be notified may be changed from time to time upon written notice
by Geriatric and Medical Companies, Inc. to the United States):
Original to:
Geriatric & Medical Companies, Inc.
5601 Chestnut Street
Philadelphia, PA 19139
Attn: General Counsel
Copy to:
Mesirov Gelman Jaffe Cramer & Jamieson
1735 Market Street
Philadelphia, PA 19103
Attn: Robert P. Krauss, Esquire
The notice of default will specify the circumstances of the
alleged default and contain a description of what Geriatric and
Medical Companies, Inc. may do to cure the alleged default.
Geriatric and Medical Companies, Inc. will have ten (10) calendar
days from receipt of the notice to cure the alleged default,
using either the United States' suggested cure or any other
method it deems appropriate. If, at the end of the ten (10) day
period, the United States determines that Geriatric and Medical
Companies, Inc. is still in default, it may, at its sole option,
exercise any of the remedies described in Paragraph 13.
15. Default Jeopardizing Health and Safety. In the event that
the United States believes that Geriatric and Medical Companies,
Inc., or any of its subsidiaries, is in default of the terms of
this Consent Order, and that the alleged default creates an
immediate threat to the health and safety of any residents, the
United States may exercise any of the remedies described in
Paragraph 13, notwithstanding the notice and cure provisions
contained in Paragraph 14.
16. Each Party Bears Its Own Costs. Each party to this Consent
Order shall bear its own costs except as otherwise provided
herein.
17. Prohibition Against Retaliation. Geriatric & Medical
Companies Inc. and its subsidiaries, employees, contractors
and/or subcontractors agree not to take any retaliatory action
against any individual or individuals who cooperated with this
investigation. The United States agrees not to take retaliatory
action against Geriatric & Medical Companies Inc. and its
subsidiaries, employees, contractors and/or subcontractors as a
result of this Consent Order or in relation to the underlying
allegations raised in the Complaint filed in this action.
18. Binding Order. This Consent Order shall be binding on the
heirs, administrators, executors, successors, and transferees of
Geriatric & Medical Companies, Inc. and its subsidiaries.
Judge
United States District Court<PAGE>
We, the undersigned, consent to
the entry of the above Consent Order. We represent to the Court
that this Consent Order contains a complete description of the
agreement between the parties. All material representations,
understandings and promises of the parties are contained in
this Order. Any modifications must be set forth in writing
and signed by all parties. Geriatric & Medical Companies, Inc.
and its subsidiaries represent that this Consent Order is entered
into with knowledge of the events described herein, and that it is
entered into knowingly and voluntarily, without any degree of
duress or compulsion whatsoever.
UNITED STATES OF AMERICA: GERIATRIC & MEDICAL COMPANIES,
INC.:
MICHAEL R. STILES
UNITED STATES ATTORNEY
JAMES G. SHEEHAN
ASSISTANT U.S. ATTORNEY
CHIEF, CIVIL DIVISION
DAVID R. HOFFMAN
ASSISTANT U.S. ATTORNEY
