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MedQuist Clams Up
Company fails to Respond to Questions; New SEC filings Indicate Stock
Listing in Jeopardy
The Asheville Tribune and I apparently have been put on a "do not
contact" list following last week’s disclosures regarding possible
outsourcing of Veterans Administration medical transcriptions to a
company in India.
MedQuist, a NASDAQ listed company in New Jersey that is 71 percent owned
by the Dutch company Royal Phillips, closed its Asheville office last
week and laid off the system administrator who had accused them of
outsourcing Veteran’s Administration medical records overseas.
On March 24 the company announced it would fail to meet the Security and
Exchange Commission’s extended deadline of March 30 for filing its
Annual Report on the required 10K form. On March 31 the NASDAQ responded
with notification to MedQuist that they would be de-listed from the
exchange on April 8 unless they filed an appeal. Also, MedQuist’s
trading symbol was changed from MEDQ to MEDQE to indicate their
out-of-compliance status.
MedQuist promptly filed the appeal and issued proper notification with
an SEC 8K report. The appeal provides MedQuist up to six weeks of
additional time to prepare the 10K or to explain why they cannot provide
financial statements. If they are de-listed due to a lack of financial
information they would also be excluded from trading in the Over The
Counter (OTC) market.
None of this has been picked up in the mainstream media. But many other
worms in the medical transcription can have come to light.
David Lazarus, columnist for the San Francisco Chronicle, independently
came up with other examples of questionable outsourcing of medical
transcriptions to companies in Pakistan and the Philippines. A Website
http://www.privacyforvets.com/
had 30,000 hits after The Asheville Tribune posted the story on its
Website,
http://www.ashevilletribune.com/ ; and I had whistle blower Susan
Purdue on my Sunday afternoon talk show on WWNC-AM 570. She also
appeared on the Web-based morning radio program,
http://www.thepowerhour.com/
hosted by Joyce Riley.
While working on that story we spoke with a public relations
representative at Ruder Finn, Inc., the agency representing MedQuist.
The young lady obtained two denials from the firm in short order and we
included them in the story.
But when we got back to her with follow-up questions we received no
reply.
The nature of our questions may be considered provocative but the
company’s denials were issued in the present tense. There was no
statement denying that what Purdue alleged happened was untrue. For the
record, here are some of the questions MedQuist won’t answer:
Are you aware of the allegations (Susan Purdue) has made regarding
outsourcing medical transcription overseas?
MedQuist’s Web site says there are 10,000 US/based MedQuist
transcriptionists.
Are there any who do MedQuist work overseas?
If so, did any work for MedQuist on VA medical records? If so, how do
you guarantee confidentiality of the data? If so, How do you comply with
HIPPA regulations?
Does MedQuist have transcribers in India? Pakistan?
Have you ever? When? If in the past but not now, when were they
discontinued? Have military transcriptions been outsourced overseas? Do
you think it is a security risk to outsource to transcribers in those
countries?
What impact could overseas outsourcing of military records have on
your relationship to government agencies such as the Veterans
Administration or other medical organizations?
What specific allegations of improper billing have been brought to
the board’s attention? Would this include the possibility of federal
charges of "procurement fraud" due to excessive profit margins due to
overseas transcriptions under federal contracts?
Has MedQuist been investigated by the FBI or any other regulatory or
criminal agency regarding these allegations?
Was the company’s decision to delay release of the 10-K annual report
prompted by concerns over possible criminal liability under the
Sarbanes-Oxley Act of 2002?
Finally, it is our understanding that Susan Purdue has invested her
life savings in defending herself during her testimony on legal fees. If
the company’s Board of Directors internal audit substantiates Susan
Purdue’s charges, will she be compensated for bringing the problems to
management’s attention?
But those weren’t the best questions. I saved them for last:
Questions for Gregory M. Sebasky, new MedQuist President and CEO: Are
any MedQuist loans, notes or other financial instruments dependant upon
maintaining listing on the NASDAQ, or being able to be traded in the OTC
market? Please provide a list of insider trading since the date of Susan
Purdue's e-mail notifying management she had contacted the FBI, on Sept.
16, 2002. This list should cover all current and former corporate
executives and those considered by the SEC to qualify as "insiders."
A company’s refusal to answer questions doesn’t necessarily imply guilt.
But the normal reaction would be to simply call back, or e-mail, to
politely refuse further comment. Writers and talk show hosts can live
with that. But MedQuist’s abrupt termination of communications is
unprofessional and reflects poorly on their management.
By the way, I stated "new CEO." MedQuist has had four of them in the
past 18 months, roughly since Purdue went to the FBI with her story.
We’ll keep an eye on the situation.
This story filed for the Tribune by Bill Fishburn.
Comments to
tribuneeditor@bellsouth.net
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