BETHESDA, Md., Aug. 9 /PRNewswire-FirstCall/ -- Hanger Orthopedic Group, Inc. today announces preliminary findings of an independent investigation of certain alleged billing discrepancies. As previously announced, on June 15, 2004, the Company disclosed that an employee at its patient-care center in West Hempstead, New York alleged in a television news story aired on June 14, 2004 that there were instances of billing discrepancies and other noncompliant conduct at that facility.
On June 18, 2004, the Company announced that on June 17, 2004, the Audit Committee of the Company's Board of Directors had engaged the law firm of McDermott, Will & Emery to serve as independent counsel to the committee and to conduct an independent investigation of the allegations. The scope of that independent investigation has been expanded to cover certain of the Company's other patient-care centers. In addition, the Company also disclosed on June 18, 2004, that the U.S. Attorney's Office for the Eastern District of New York subpoenaed records of the Company regarding various billing activities and locations on June 17, 2004, and that the Securities and Exchange Commission had commenced an informal inquiry into the matter. The Company is cooperating with the regulatory authorities.
Based on the preliminary results of the independent investigation, management believes that the evidence gathered to date indicates that any billing discrepancies are likely to be primarily at the West Hempstead patient care center. The net sales of the West Hempstead facility for the years ended December 31, 2002, 2003 and the six months ended June 30, 2004 were $1.6, $1.9, and $0.9 million, respectively, or less than 0.5% of the Company's net sales for each of the three periods. Based on the initial results of the investigation, management does not believe the resolution of the matters raised by the allegations will have a materially adverse effect on the Company's financial statements. It should be noted that the investigation is not complete, and additional regulatory inquiries may be raised relating to other of the Company's billing activities and or other locations. No assurance can be given that the final results of the investigation will be consistent with the results to date or that any discrepancies identified during the ongoing investigation will not have a material adverse effect on the Company's financial statements. Since the Company presently cannot estimate the amount of any potential overpayments, penalties or fines, nor can it estimate the costs and expenses that will be incurred in completing its investigation and the responses to any regulatory inquires or proceedings, it plans to recognize such costs and expenses as they are incurred.
Hanger Orthopedic Group, Inc., headquartered in Bethesda, Maryland, is the world's premier provider of orthotic and prosthetic patient-care services. Hanger is the market leader in the United States, owning and operating 614 patient-care centers in 44 states and the District of Columbia, with 3,385 employees including 1,016 practitioners. Hanger is organized into two business segments: patient-care which consists of nationwide orthotic and prosthetic practice centers and distribution which consists of distribution centers managing the supply chain of orthotic and prosthetic componentry to Hanger and third party patient-care centers. In addition, Hanger operates the largest orthotic and prosthetic managed care network in the country.
This document contains forward-looking statements relating to the Company's revenues, contracts and operations. The United States Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for certain forward-looking statements. Statements relating to future revenues, contracts and operations, as well as the results of an incomplete investigation and certain legal proceeds in this document reflect the current views of management. However, various risks, uncertainties and contingencies could cause actual results or performance to differ materially from those expressed in, or implied by, these statements, including the Company's ability to enter into and derive benefits from managed care contracts, the demand for the Company's orthotic and prosthetic services and products, the uncertainties inherent in an incomplete investigation and legal proceeds and the other factors identified in the Company's periodic reports on Form 10-K and Form 10- Q filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934. The Company disclaims any intent or obligation to update publicly these forward-looking statements, whether as a result of new information, future events or otherwise.
Hanger Orthopedic Group, Inc.CONTACT: Ivan R. Sabel, George E. McHenry, or Jason P. Owen, of HangerOrthopedic Group, Inc., +1-301-986-0701
Web site: http://www.hanger.com/
