According to the firm's Form 10-K dated November 14, 2002, following a series of settlement discussions, the parties reached an agreement to settle both the federal class action, and a related state class action, for $42 million. Under the terms of the settlement, Apria has paid $1 million and its insurance carriers have paid $41 million. Pursuant to the settlement, the District Court class action was dismissed on August 21, 2002 by entry of an Order dismissing the action with prejudice.
The original complaint alleged the defendants were involved with a fraudulent scheme involving the merger of Homedco Group Inc. ("Homedco") and Abbey Healthcare Group Inc. ("Abbey") to form Apria in July 1995. Specifically, defendants represented to the public that the merger would achieve significant cost savings, was moving smoothly and rapidly through the integration process, and that the combined company would
experience and was experiencing economies of scale and efficiencies in field
operations. In truth, Apria's new computerized billing system, the "lifeblood
of the Company," was consistently billing insurance companies for the wrong
types of payments and/or authorizing services not covered by the subject
insurance, causing insurance companies to reject the bills and Apria to
accumulate massive amounts of accounts receivable of doubtful collectibility.