It pays Scooter Store to stay open

Agents cluster at the front door of Building No. 1 during the February raid. Agents cluster at the front door of Building No. 1 during the February raid. Photo: TOM REEL, Tom Reel/Express-News Photo: TOM REEL, Tom Reel/Express-News Image 1 of / 27 Caption Close It pays Scooter Store to stay open 1 / 27 Back to Gallery

Officials at The Scooter Store have lots of financial motivation to keep the doors open despite issuing pink slips this week to all but about 300 of their 1,800-person workforce.

That's because the New Braunfels-based company still is collecting Medicare payments for power wheelchairs it already has delivered to customers, who are mostly elderly or disabled.

Medicare, for the most part, switched in 2011 from paying a lump sum for power wheelchairs to paying for them on a rental basis for up to 13 months.

The privately held Scooter Store “can't close right away because if (it closes), Medicare will instantly suspend” its ability to bill for devices furnished on a rental basis, according to a former employee.

Two employees who learned this week they'd been laid off confirmed the former worker's account.

The former and present employees asked to remain anonymous because they weren't authorized by The Scooter Store to discuss its operations.

The rental payments are not disbursed in equal sums. Medicare pays 15 percent of the device's price in each of the first three months of the rental, followed by monthly payments of 6 percent in each of remaining 10 months, according to a Centers for Medicare and Medicaid Services (CMS) spokeswoman. Title transfers to the patient after the 13th month.

If The Scooter Store were to shut down, the company would easily lose millions of dollars in Medicare payments on chairs it's delivered over the past year.

One of the furloughed employees said the company had a goal of delivering 5,000 chairs a month, but had fallen short of meeting that number in recent months.

The Scooter Store said it's working on creating a “viable business model.” Whether it succeeds in identifying — as Chief Restructuring Officer Larry Young called it in a statement Wednesday — a “path forward” remains to be seen.

Citing “significant business challenges,” Scooter Store CEO Martin “Marty” Landon on March 8 notified staffers that, with certain exceptions, they were being placed on furlough, or unpaid leave.

The company in recent months has struggled to cope with cuts in reimbursements and changes in processing procedures implemented by CMS.

Compounding its problems was a Feb. 20 raid by about 150 federal agents on the company's headquarters, presumably as part of an investigation into Medicare and Medicaid fraud.

Landon later told employees the company is not a target of the probe, but authorities aren't saying anything.

About 300 Scooter Store employees were brought back after the furlough, including 117 in New Braunfels, according to an email Landon sent Tuesday night.

They were brought back because The Scooter Store is “trying to collect on all of the units that have already been delivered,” said Theresa M. Jones, 24, a four-year employee, who wasn't asked to return.

Those employees include service representatives and billing and collections personnel, she said.

Jones just released an e-book on her experiences at company, titled “Behind Closed Doors: The Truth About The Scooter Store From a Former Employee.”

It's not clear what happens when those Medicare payments to The Scooter Store start to dwindle if new devices aren't being delivered.

Landon said in his latest email to employees that the company had reached a formal agreement with its lenders to “fund core operations while the company develops a viable business model for the health care sector.”

“Essentially, we have to remake our operations to provide our products and services much more efficiently and always in compliance with government requirements while delivering exceptional support,” Landon said in the email.

“The new company will have significantly fewer employees than before,” he added.

A slimmed-down Scooter Store apparently is having trouble keeping up with customers' calls, though.

Some customers have complained they can't reach anyone at the company. A message on the company's toll-free number Wednesday indicated it was experiencing high call volumes and to call back.

Sandra Mathews of Ada, Okla., has been trying to get her broken scooter repaired for weeks.

“I kept calling and calling and all I would get is that recording,” Mathews said. She's now hoping another company can fix it.

In the statement released Wednesday, Young said: “Serving customer needs remains our top priority.”

He also is a managing director of AlixPartners LLP, a Michigan firm that's been retained by The Scooter Store to help with its restructuring.

pdanner@express-news.net

Twitter: @AlamoPD