Osbon told city he was closing business

Letter contradicts earlier claims

Augusta businessman Julian Osbon told the city of Augusta he was closing a company at the heart of a federal civil lawsuit against him alleging Medicare fraud, according to a letter obtained under the Georgia Open Records Act.

The letter contradicts his earlier statements, and that might create "a problem" for him, Osbon acknowledged, but he said it does not change his contention that he has done nothing wrong.

The U.S. Attorney's Office for the Southern District of Georgia is pursuing a civil lawsuit against Osbon and Augusta Medical Systems, a company Osbon once owned.

The suit claims that in 2003 Osbon closed one company, Soma Blue Inc., which had a valid Medicare license but was facing $190,000 in legal judgments, and subsequently started Augusta Medical Systems. Before it obtained a valid Medicare license, the new company used Soma Blue's Medicare provider number for more than a year to bill Medicare for more than $690,000, the U.S. Attorney's Office contends.

As evidence that Soma Blue closed, the suit points to a Feb. 11, 2003, notification to the Augusta Licensing and Inspection Department that the company was ceasing operations.

Osbon has said he did not shut the company down then and that the city had no proof that any such notice was given. He said while he had intended to close Soma Blue, he was forced to operate the two companies side by side over that period, with Soma Blue billing for Medicare patients, until Augusta Medical got its own Medicare number. Both companies were wholly owned by Osbon and sold vacuum therapy devices to treat erectile dysfunction.

Osbon filed an Open Records Act request in September with the city asking for proof of its position and was provided a single screen capture showing a notation that the business end date for Soma Blue was Feb. 11, 2003. After a recent Augusta Chronicle story repeated the city's position that the business had closed then, Osbon fired off a letter to Licensing and Inspection Director Rob Sherman and Augusta commissioners claiming that he had a valid business license for Soma Blue for 2003 and that the company had not closed. If the city could not prove otherwise or change its position, "I will be forced to seek compensation" for subsequent legal expenses, Osbon wrote.

Sherman then found the letter dated Feb. 11, 2003, asking the city to terminate the business license of Soma Blue. The letter says Soma Blue closed on Jan. 31, 2003, and Augusta Medical Systems began the next day, with assets from Soma being transferred to the new company

"The name Soma Blue will continue to be used for several months in order to facilitate the conversion of customer accounts and vendors," the letter reads. "However, Augusta Medical Systems will be the legal reporting entity for sales tax, income tax, property tax and all other required filings."

The letter is signed by Osbon, and he says it is his signature.

"I think our position really doesn't change very much because we knew we were trying to shut the company down," Osbon said. "I did not remember this letter, but I'm not surprised by it because that's the kind of letter an attorney probably wrote for me."

While he questions why it didn't turn up in the earlier search, and it is not in his own files, it doesn't mean that Soma Blue couldn't operate with a valid Medicare number.

"The bottom line is even if I was guilty of everything they're claiming, I'm really not guilty of anything because every claim that we made on Medicare was done through that license," Osbon said. "It was a legitimate license. The license was issued in my name. I owned that company. The license didn't change hands. If you look at the letter, the letter did say there are some matters that have to be resolved before Soma Blue is no longer being used. Our claim is the Medicare license (for Augusta Medical Systems) not being issued is one of them."

While it calls into question the validity of Soma Blue's Augusta business license, that is not a federal matter, Osbon said.

"Now, we might have been subject to some kind of penalty from the city of Augusta," he said. "But it would not have prevented us from doing what we were doing. From my perspective, it does create a problem but it doesn't change things. We had the intention all along of closing the business down."

And ultimately the patients and Medicare got what they paid for, Osbon said.

"As far as taking care of the patient, we did everything right," he said. "We did not overcharge; we did not charge for something we didn't deliver."