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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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 19, 1998
STAR MULTI CARE SERVICES, INC.
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(Exact Name of Registrant as Specified in Charter)
New York 1-10751 11-1975534
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File No.) Identification No.)
99 Railroad Station Plaza, Hicksville, New York 11801
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (516) 938-2016
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events.
In February 1998, Star Multi Care Services, Inc. (the "Company") was
advised by its regulatory counsel that jurisdiction with respect to a previously
disclosed audit (the "1997 Audit") of Star Multi Care Services of Florida, Inc.
d/b/a American Health Care Services, the Company's Medicare agency, by the
Office of Audit Services of the Office of Inspector General of the United States
Department of Health and Human Services, which had previously been forwarded to
the Civil Division of the United States Attorney for the Southern District of
Florida (the "US Attorney") by the Medicare intermediary assigned to administer
Medicare payments in Florida, has been relinquished by the US Attorney to the
Medicare intermediary for recovery of an administrative overpayment.
The Company has now been informed that the Medicare intermediary has
assessed an administrative overpayment against the Company in the amount of
$1,248,747 based on the 1997 Audit. The Company has appealed the administrative
overpayment determination by pursuing administrative and judicial remedies. Such
appeal could result in elimination or reduction of the overpayment amount. The
Company's regulatory counsel has also advised that the Company has claims
against third-parties (e.g., subcontractors and licensed home health agencies)
for a portion of any liability of the Company in connection with such
administrative overpayment. The Company plans to set up a reserve in connection
with the administrative overpayment after consultation with the Company's
independent accountants and may be less than the total administrative
overpayment amount. Management expects this matter to be satisfactorily
resolved.
The Company discovered errors in certain cost reports that had been
previously submitted by the Company to the New York State Department of Social
Services during the years 1993-1995, the basis of which served to determine the
Medicaid reimbursement rates in respect of the Company for the years 1994-1996.
Amended cost reports containing the correct data were submitted to the New York
State Department of Health (the "DOH") in February 1998, which are expected to
result in the DOH's retroactive recalculation of the Company's Medicaid
reimbursement rate and imposition of a substantial overpayment assessment
against the Company. The Company plans to set up a reserve in connection with
such potential overpayment assessment after consultation with the Company's
independent accountants and may be less than the total overpayment assessment,
if and when assessed.
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SIGNATURES
Pursuant to the requirement 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.
Dated: March 18, 1998 STAR MULTI CARE SERVICES, INC.
By: /s/ Stephen Sternbach
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Stephen Sternbach
Chairman of the Board, President and
Chief Executive Officer
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