American Renal, Former Execs Charged with Healthcare Fraud Scheme
The SEC charged the dialysis provider and three former executives with a healthcare fraud scheme involving revenue manipulation.
Source: Getty Images
By - The Securities and Exchange Commission (SEC) has charged the nationwide dialysis service provider American Renal Associates Holdings of engaging in a healthcare fraud scheme involving revenue manipulation. In addition, former senior executives Jonathan Wilcox, Jason Boucher, and Karen Smith were also charged for their part in the scheme.
According to the SEC compliant, American Renal Associates manipulated revenue adjustments from 2017 to November 2018 to embellish their financial performance and hit two key targets.
The American Renal Associates manipulation scheme concerned the misleading accounting practices known as "topside" adjustments.
“Topside adjustments are used to reflect actual cash received from insurance companies for patient services and update initial estimates of payments [American Renal Associates] expected to receive,” the report explained.
The dialysis service provider allegedly postponed recording topside adjustments until the
revenue adjustments were needed to meet the financial metric targets.
Lastly, the company was accused of misleading the American Renal Associates’ auditor to prevent them from uncovering the improper accounting practices.
In September of 2019, the American Renal Associates restated its financial statements, showing that the company overstated its net income by over 30 percent in 2017.
Additionally, the company overstated its net income by more than 200 percent for the first three quarters of 2018.
“ARA (American Renal Associates) and its senior executives allegedly engaged in an extensive revenue manipulation scheme for nearly two years,” Jennifer S. Leete, Associate Director of the SEC’s Division of Enforcement, said in the press release.
“The SEC will continue to hold companies and their executives responsible for providing investors with misleading financial information.”
According to the complaint, the SEC charges the defendants with violation of antifraud, reporting, book and records, and internal accounting control provision of the federal securities laws. Former executives Wilcox, Boucher, and Smith were also charged with making false statements to auditors.
The American Renal Associates refused to admit or deny the allegation in the complaint filed by SEC but agreed to settle the charges by paying $2 million.
