The Scooter Store lays off hundreds of employees

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Odd Andersen/AFP/Getty Images

(CBS News) Power wheelchair manufacturer The SCOOTER Store laid off 1,500 of its 1,800 employees, after an FBI and Inspector General raid of its headquarters in February. The developments came after a "CBS This Morning" investigation into the power wheelchair industry, which uncovered questionable practices, namely a tendency to push patients to doctors The SCOOTER Store knows will prescribe unnecessary chairs. Medicare requires that patients are evaluated by their primary physician.

Brian Setzer and three other former SCOOTER Store employees also told "CBS This Morning" that the company's strategy was to"bulldoze" doctors into writing prescriptions, so people would get the chairs, whether they needed them or not. "They were just pushing harder and harder to get chairs sold," Setzer said. Setzer is now a federal witness.

An internal SCOOTER Store email obtained by CBS News indicates the company is now restructuring in an attempt to stay financially afloat. "[W]e have to remake our operations to provide our products and services much more efficiently and always in compliance with government requirements," wrote CEO Marty Landon.

Read the entire email below.

To: All Employees

From: Marty Landon

In an effort to maintain transparency regarding the company's status, I wanted to take this opportunity to provide a current update to each of you.

Over the last week we have reached a formal agreement with our lenders that would fund core operations while the company develops a viable business model for this healthcare sector. Essentially, we have to remake our operations to provide our products and services much more efficiently and always in compliance with government requirements while continuing to deliver exceptional support.

With respect to the furlough announced a week ago Friday, we have brought back approximately 300 employees (117 in New Braunfels and the remaining in the field) to assist in meeting customer requirements and supporting operations. While the Company continues to develop its strategic and operational plan, one thing has become clear, the new company will have significantly fewer employees than before. Unfortunately, without a significant change to our capital structure, employees still on furlough will be permanently laid off effective March 31, 2013. All employees who have been furloughed will be receiving a formal notice in the mail, but I wanted to notify you personally as soon as practicable and let you know how much we appreciate your effort and dedication to this Company. In addition, New Braunfels employees who have been recalled will receive a separate letter consistent with applicable law. Recalled employees outside of New Braunfels should not expect to receive any additional communication at this time. We regret that we could not provide more advanced notice. Recognizing many of you will have questions, I have included two documents for your assistance: a list of frequently asked questions and the associated answers, as well as a benefits contact document.

Thank you again for all of your hard work and dedication to this Company. We recognize the challenges this circumstance places on you and your loved ones, and continue to work diligently to define the appropriate path for the Company. Your commitment to our customers in need over the months and years has been unwavering and a source of strength to many.

Martin J. Landon