WOBURN, Mass. -- PolyMedica Corp. said its Liberty units in Florida have returned to normal operations, a day after agents from the Federal Bureau of Investigation executed search warrants and served a grand-jury subpoena.
The FBI searched the offices of PolyMedica's Liberty Medical Supply and Liberty Home Pharmacy, a diabetes-supply vendor.
PolyMedica (PLMD), a maker of diabetes-testing kits, said Wednesday that it is cooperating with the investigation.
The company added that FBI officials had "copied extensive records of the company" at the Liberty offices in Florida, but that it doesn't know the extent of the investigation. PolyMedica also disclosed it was served Tuesday with a grand jury subpoena.
Shares of PolyMedica stopped trading on the Nasdaq Stock Market at around 1:46 p.m. EDT Tuesday after reports of the FBI raid surfaced. Trading resumed around 11 a.m. Wednesday and the shares sunk to a 52-week low of $9.50 during the day. As of 4 p.m. EDT, the shares were down $3.93, or 26%, to $11.25.
Tuesday's raids came after PolyMedica said earlier this month that the U.S. Attorney's office for the Southern District of Florida had been conducting a criminal investigation of Liberty Medical related to Medicare fraud. PolyMedica acquired the business in 1996.
A couple of weeks ago, PolyMedica said the company and its attorneys were cooperting with the investigation, and that the company believed Liberty Medical was operating in full compliance with the law.
A report in the Aug. 6 issue of Barron's said the potential criminal charges stem from PolyMedica's billing and general business practices. People close to the probe told Barron's that the company is suspected of shipping products that weren't ordered or to people it knows are dead.
Controversy has followed Polymedica since November, when Barron's first reported that the FBI was investigating the company for possible fraud at Liberty Medical.
According to the first Barron's article, the FBI was looking into allegations that PolyMedica and Liberty Medical billed Medicare for supplies that customers returned, delivered supplies that weren't ordered and overstocked supplies. At the time, the company's chief executive said he wasn't aware of any investigation.
In March, an analyst at CIBC World Markets learned that an investigation into PolyMedica's billing practices began in June 1999, but the company was never contacted.
In December 1999, the Atlanta office of the Inspector General of the Department of Health and Human Services referred the investigation to the FBI's health-care fraud unit. It also asked the FBI to notify HHS if action was needed against those who participated in the Medicare program.
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