05/21/2012 (5:56 am)
Osborne
Chancellor of the Exchequer George Osborne
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Chancellor of the Exchequer George Osborne
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Janet Reuther-Schopp doesn’t like to remember what happened to Reuther Automotive Group three years ago this week.
Her family’s 53-relationship with the Chrysler and Jeep brands came to an abrupt end during Chrysler’s government-orchestrated bankruptcy. Thinking about it still makes Reuther-Schopp sad and angry, so she’d rather talk about the positive things that have happened since May 14, 2009.
The former new-car dealership in Creve Coeur has remade itself as a used car sales and service business. Reuther has found new sources for financing and parts and has built relationships with nearby employers, which authorize it to pick up employees’ vehicles for service. It also has relied on longtime niche businesses like snowplow maintenance.
The business has 19 employees, down from 100 in the new-car days. “We’re getting by, which is better than some of the dealers in our situation,” Reuther-Schopp says. “I just get up each morning and say, ‘Today is a new day; let’s see where this one goes.’”
Not that she and three business-partner siblings are ready to let go of the past. Their father, Leo Reuther Sr., began selling Jeeps when they were used more as farm trucks than as commuter vehicles, and his children are fighting to be compensated for the loss of that legacy.
Reuther Automotive is one of 140 former Chrysler dealers pursuing a lawsuit against the federal government. They’re relying on the Fifth Amendment, which says private property can’t be taken for public use without just compensation.
Leonard Bellavia, a Mineola, N.Y., attorney who represents the dealers, says his clients lost more than $500 million.
“The government controlled the Chrysler bankruptcy, in that they made the bailout contingent on filing for bankruptcy and terminating 25 percent of the dealers,” Bellavia said. “The government was using Chrysler as its agent to facilitate the governmental taking of private property.”
Many such “takings” suits are thrown out quickly, but a judge has already rejected the government’s attempt to dismiss this one. It’s now in the discovery phase, and Bellavia says he believes that emails and other documents from the federal automotive task force will bolster his case.
He intends to subpoena task force officials, including former chairman Steven Rattner, as he seeks justice for Reuther and the other dealers.
The government’s dealership strategy was “arrogant and uncaring,” Bellavia says. “I don’t want to give you a Fourth of July speech here, but it goes against the idea of working hard and building something that you can hand down to your family.”
Family ties certainly mattered to the Reuthers, but relatives were among those who had to leave the dealership payroll.
“Having a family-run business and having to allow your children to go out and find other jobs, that’s not what we had worked all these years for,” Reuther-Schopp said.
If the Reuthers once felt privileged, with a business they expected to pass on to the next generation, they now feel like struggling entrepreneurs. The inventory of 30 or so used cars looks sparse on a five-acre lot that once held 300 vehicles.
Reuther-Schopp says the family has had offers for the land, and might sell for the right price. The current business might be more profitable on a smaller site, she said.
Usually, though, she doesn’t allow herself to think that far ahead, just as she tries not to dwell on the injustices of three years ago. “You have to keep your thoughts in the here and now,” she said.
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The U.S. Justice Department has accused RehabCare Group Inc. of paying more than $10 million in kickbacks to gain access to Medicare and Medicaid patients in Missouri nursing homes.
According to a civil lawsuit transferred last week to U.S. District Court in St. Louis, Clayton-based RehabCare began making payments in 2006 to induce a Missouri nursing home chain to grant RehabCare a contract to provide therapy services.
RehabCare’s revenue-sharing arrangement with the nursing home owner — Sikeston, Mo.-based Health Systems Inc. — defrauded the federal Medicare and Medicaid programs of millions of dollars, federal investigators allege.
Justice Department officials use the federal anti-kickback statute, which forbids paying others for referrals of Medicare and Medicaid patients, as a critical tool in fighting health care fraud and holding down costs in federal health programs.
The lawsuit, originally filed under seal by a whistleblower in Minnesota and joined last year by the U.S. government, provides details of a long-running federal probe into RehabCare’s business dealings in Missouri.
RehabCare lawyers say the government’s accusations do not contain sufficient details to support the accusation that the revenue-sharing scheme comprised illegal kickbacks.
“The government’s substantive kickback allegations – absent the conclusory allegations, legal conclusions and innuendo – are rather threadbare,” RehabCare’s lawyers said in court papers.
Named as defendants are RehabCare Group, Health Systems Inc., and its affiliate, Rehab Systems of Missouri LLC, which previously provided therapy services to Health Systems nursing homes. No individuals are named.
Until recently, Clayton was the headquarters for RehabCare. Last year, RehabCare was purchased by Louisville-based Kindred Healthcare Inc.
“We deny and intend to vigorously defend against these allegations,” Susan Moss, a Kindred spokeswoman, said in a written statement.
Scott Hinkle, general counsel for Health Systems, declined to comment on the pending litigation.
According to federal investigators, the alleged kickbacks involved a tangled web of ownership and lucrative business ties. RehabCare “has received in excess of $70 million in revenue from the transaction since it closed in 2006,” according to the government’s complaint.
Investigators from the FBI and Office of Inspector General at the Department of Health and Human Services say that RehabCare crafted an illegal arrangement with Health Systems and Rehab Systems. The deal, investigators allege, included a one-time, $600,000 payment from RehabCare to Rehab Systems, as well as an ongoing 30 percent cut of federally financed therapy services, which was split between Health Systems and Rehab Systems.
RehabCare, in exchange, was granted a five-year contract to provide therapy services to nursing home patients of Health Systems.
In all, Rehab Systems recorded profits of more than $10 million from the nursing home contract, even though the limited liability company “has not had a single full-time employee … conducts no operations … and provides nothing of value to the nursing homes and no legitimate services to RehabCare,” investigators allege.
Talks between the three companies started in 2003. Seeking to increase its market share in Missouri nursing homes, RehabCare entered negotiations that included purchasing Rehab Systems from Health Systems, which was owned by James Lincoln. Lincoln also had an ownership stake in Rehab Systems.
According to the government, those talks stalled when negotiators voiced concerns that the deal could violate the anti-kickback law. That’s because RehabCare’s five-year contract with Health Systems was made contingent on its willingness to also purchase Rehab Systems.
In 2006, the parties agreed to a contract that did not involve an acquisition. RehabCare began providing therapy services to Health Systems’ nursing homes, effectively displacing Rehab Systems — but only on the condition that Rehab Systems get a cut of RehabCare’s revenue, even while Rehab Systems did none of the work, investigators allege.
According to court papers, Lincoln owns about 60 nursing homes in Missouri. Rehab Systems was co-owned by Lincoln, his son Jimmy Lincoln, and manager Tom Hudspeth.
In February 2006, RehabCare made a one-time payment of about $600,000 to Rehab Systems, federal investigators allege. The payment “created a financial windfall to Hudspeth,” who had a financial stake in Rehab Systems, but no ownership stake in Health Services or the nursing homes, investigators say.
They also say that RehabCare charged Health Systems only 70 percent of the Medicaid reimbursement amount — while Health Systems billed the government for the full amount. Health Systems and Rehab Systems split the difference of the remaining 30 percent.
Justice Department officials say that the $600,000 payment and the profit received by Rehab Systems amount to illegal kickbacks. Federal law forbids the payment or acceptance of “any renumeration” for referrals of patients for federal health care services.
In court papers, RehabCare lawyers acknowledged that the company made a payment to Rehab Systems, but differed over the amount. The company paid a $405,765 “recruiting fee” to Rehab Systems, and insist that the payment represents “reasonable consideration and fair market value,” the company’s lawyers assert in court records.
The case began in 2007 as a whistleblower lawsuit, filed under seal by a RehabCare competitor, Minnesota-based Health Dimensions Rehabilitation Inc. RehabCare has contracts with about 50 nursing homes in Minnesota.
After conducting an investigation, the Justice Department decided in December to join the lawsuit. The case was transferred to St. Louis because most of the relevant events took place in Missouri and key witnesses are located here.
The suit accuses RehabCare and the other defendants of filing false Medicare and Medicaid claims and of making or using false records or statements to support those claims. The Justice Department has asked for the defendants to pay treble damages plus civil penalties of as much as to $50,000 per every false claim. But the outcome of such cases is usually a settlement.
“There were many claims filed,” said Assistant U.S. Attorney Chad Blumenfield of Minneapolis.
He said that one purpose of the anti-kickback statute is to control costs by discouraging the payment of referral fees for health services. It also encourages providers to make health care decisions “based on what’s in the best interest of patients, rather than the best financial interests of the nursing home or the therapy company.”
Home Depot says its fiscal first-quarter profit climbed 27.5 percent as warmer weather brought consumers out for spring gardening and lawn products.
The world’s biggest home-improvement company also boosted its 2012 financial outlook Tuesday, citing its year-to-date performance.
But the Atlanta retailer’s quarterly revenue results and its full-year revenue guidance fell short of analysts’ expectations. Its stock dropped 3 percent in premarket trading.
Home Depot Inc. reported net income of $1.04 billion, or 68 cents per share, for the period ended April 29. That’s up from $812 million, or 50 cents per share, a year earlier.
The latest results beat the 64 cents per share that analysts polled by FactSet expected.
“We saw a stronger-than-expected start to the year, driven by record warm weather and continued demand for core products,” Chairman and CEO Frank Blake said in a statement.
Revenue rose 6 percent to $17.81 billion from $16.8 billion. But that missed Wall Street’s estimate of $17.89 billion.
Home Depot’s shares fell $1.50, or 3 percent, to $48.38 ahead of the market opening.
Revenue at stores open at least a year rose 5.8 percent, with the metric climbing 6.1 percent for U.S. locations.
This figure is a key indicator of a retailer’s health because it excludes results from stores recently opened or closed.
The company expects fiscal 2012 earnings of $2.90 per share, with revenue up about 4.6 percent. This implies revenue of approximately $73.66 billion. Home Depot previously predicted earnings of about $2.79 per share and a 4 percent revenue increase.
Analysts had expected earnings of $2.90 per share on revenue of $74.06 billion.
Home Depot has 2,254 stores in 50 states, the District of Columbia, Puerto Rico, U.S. Virgin Islands, Guam, 10 Canadian provinces, Mexico and China.
You’re not normally one to let your personal life interfere with work, but when you’re ducking out of the office a few times a week to take Dad to dialysis or your kid to physical therapy, it’s tough to get everything done to your usual standard.
Perhaps you need a break from juggling. Thanks to the federal Family Medical Leave Act (FMLA), you may be entitled to up to 12 weeks of unpaid time off per year to tend to certain family-care needs. More workers took advantage of this right in the past year, a recent Towers Watson survey found.
"As the economy picked up, people felt more comfortable asking for time away to deal with personal matters," explains Tom Billet, a senior consultant at the firm. Should you find yourself needing a respite to focus on family, take these steps to ease the transition.
Know your rights
To qualify for FMLA leave, you must have worked for a company with 50 or more employees for at least a year and put in 1,250 hours in that time. FMLA applies if you, a parent, child, or spouse develops a serious illness, sustains a major injury, or requires ongoing medical treatment.
Other eligible circumstances: births, adoptions, and the deployment or recuperation of a military family member. The law guarantees that your position will be restored when you return. Health coverage continues while you’re away, but you probably won’t accrue vacation or retirement benefits.
More men choosing kids over career
See if you afford it
Before putting in for leave, be sure you can manage without the income. Don’t have several months’ expenses banked in an emergency fund? Use paid vacation first.
For your own ailments, exhaust sick days; also inquire about short-term disability. Should your relative only require intermittent care, take the leave, but work a few days on, a few days off to keep cash coming in.
Get buy-in from the boss
You can’t be fired for taking FMLA leave, but the way you manage this process can affect the way your employers view you — and your promotability. So be proactive.
Start by explaining the situation to your boss (you’ll be required to provide proof). Specify how much time off you’ll need, and ask what you can do to lessen workflow disruption.
"Problems arise when people take leaves in dribs and drabs," says Las Vegas employment lawyer Mary Chapman. "It’s harder for HR to keep track, and co-workers inherit a larger workload."
Best to make the leave as predictable as possible. For example, schedule appointments for Junior’s physical needs at the same time each week. Also, open up to co-workers about what you’re dealing with, advises Christopher Metzler, a human resources professor at Georgetown. Otherwise, your empty chair may raise eyebrows — and questions about whether you’re slacking.
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A surprisingly big rebound in a closely watched U.S. manufacturing survey continued to shore up markets Wednesday, particularly in continental Europe where traders returned to their desk after the May Day public holiday to the news that Dow Jones industrial average closed at its highest level in five years.
The Institute for Supply Management reported that U.S. manufacturing expanded last month at its strongest pace since June, with orders, hiring and production all up. That news came on top of a similar report out of China, the world’s No. 2 economy and has helped boost optimism about the state of the global economy, despite the ongoing debt-related problems in much of Europe.
“Just as I am getting really concerned about the depths of Europe’s economic slowdown, and the lack of policy measures to combat it, global financial markets have a spring in their step thanks to better surveys in the U.S. and elsewhere,” said Kit Juckes, an analyst at SG Securities.
In Europe, Germany’s DAX was up 0.8 percent at 6,810 while the CAC-40 in France rose 1.2 percent to 3,250. The FTSE 100 index of leading British shares, which was open Tuesday and reacted to the ISM upside rise unlike its counterparts in Frankfurt and Paris, was down 0.3 percent at 5,793.
Wall Street was poised for further modest gains, a day after the Dow Jones industrial average closed at its highest mark since 2007 _ both Dow futures and the S&P 500 futures were up 0.1 percent.
The focus over the rest of the week is likely to center on the U.S. economy in the run-up to Friday’s release of March nonfarm payrolls data _ the figures often set the market tone for a week or two after their release payday loan.
Later Wednesday, investors will have the monthly private payrolls report from ADP to assess. The ADP figures often provide a guide toward the actual government report.
“A strong reading would follow on nicely from yesterday’s data, and would set the stage for a positive report on Friday,” said Chris Beauchamp, market analyst at IG Index.
In the currency markets, the euro was giving up some recent gains and trading 0.8 percent lower at $1.3136 as figures showed the parlous state of the eurozone economy. Eurostat, the EU’s statistics office, reported that unemployment across the 17-country eurozone rose to 10.9 percent in March, its highest level since the euro was launched in 1999.
Earlier in Asia, Japan’s Nikkei 225 rose 0.7 percent to close at 9,380.25 after a sharp tumble the day before. Hong Kong’s Hang Seng gained 1 percent to 21,309.08.
Mainland Chinese shares advanced after authorities said that China’s two stock exchanges would cut fees charged for trading yuan-denominated shares by 25 percent from June 1. The benchmark Shanghai Composite Index rose 1.8 percent to 2,438.44 and the Shenzhen Composite Index gained 1.7 percent.
Benchmark oil for June delivery was down 34 cents to $105.82 per barrel in electronic trading on the New York Mercantile Exchange.
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Pamela Sampson in Bangkok contributed to this report.
Federal Reserve Chairman Ben Bernanke says further bond purchases by the Fed remain “very much on the table” if the economy needs further support.
Bernanke says the central bank remains prepared to take additional actions, referring to a possible third round of bond buying. Two now-expired programs of Fed bond purchases have been intended to push down long-term interest rates to encourage borrowing and spending.
Bernanke is speaking at a news conference after a two-day policy meeting.
He says the central bank believes that while inflation has risen lately, it will remain within the Fed’s 2 percent target.
Selling soybeans, iron and copper ore and other commodities to Asian countries has transformed Latin America over the past decade, stabilizing economies despite worldwide crises and lifting tens of millions of people into the middle class. Now, say officials from both Asia and Latin America, a second gold rush is under way.
Asian investors flush with hundreds of billions of dollars in cash now see Latin America as a top business opportunity, and they’re flooding into manufacturing, construction and other industries, particularly in up-and-coming countries such as Brazil, Peru and Mexico. That’s transforming the lucrative relationship that was based primarily on exporting raw materials to Asia, an arrangement that frustrated governments eager to stimulate their own manufacturing.
Government and business officials meeting this week at the World Economic Forum in Mexico said the investment surge means Asia is poised to overtake the United States and the European Union as Latin America’s top trading partner over the next decade. Asian representatives have been an unmistakable presence at the forum, with South Korean, Chinese and Japanese investors making the rounds at this seaside city’s gleaming white convention hall.
“We’re talking about tens of billions of dollars in just Korean banks looking for a destination,” said Kevin Lu, Asia Pacific regional director of a World Bank Group agency that insures foreign investments against political risk. “When I meet with investors, Latin America is in every conversation about this.”
Already, Chinese investment in Latin America has jumped from a few million dollars just a few years ago to about $15 billion in 2010, with most of the money going into mining and other extractive industries in Brazil, Peru and other nations, said Alicia Barcena, executive secretary for the Chile-based United Nations Economic Commission for Latin America and the Caribbean. Chinese investment in the region jumped again last year, to about $23 billion, Barcena said.
Japan, meanwhile, surpassed even that figure last year and displaced China as the region’s top Asian investment and trade partner, Barcena said. She didn’t provide a precise number for Japan’s total.
China already ranks among the top three trading partners with Peru, Brazil, Chile and Argentina, and Asian investment in auto and other manufacturing in Mexican industrial cities has greatly expanded the middle class.
“I don’t have any doubt that Asia will soon become the region’s top trading partner,” said Mexican Economy Secretary Bruno Ferrari Garcia de Alba. “In Mexico, we believe we need to get closer and closer to Asia.”
According to the U.N. economic commission, 17 percent of Latin America’s exports went to Asian-Pacific countries in 2010, more than tripling from 5 percent in 2000 business card design. Over the same span, the share of the region’s total exports that went to the United States dropped from 60 percent to 40 percent.
Ferrari said Asian-Pacific countries buy 31 percent of Mexico’s total exports, amounting to $110 billion, with that number growing by an average of 20 percent annually over the past five years.
Lu, of the World Bank Group agency, said raw material industries in Latin America are now getting only 40 percent to 50 percent of total Asian investment in the region, while the rest goes to manufacturing, construction and other businesses.
He said foreign money flowing into a new region often first goes into buying natural resources because it’s a simpler business than making things, which requires dealing with labor, setting up supply chains and complying with various government rules.
“The Chinese look at natural resources as easier to manage, while manufacturing and construction is a lot more complicated,” Lu said. “It’s a very natural progression for any bilateral trade relationship to start to become broader, and to move into other areas.”
Hanwha, a South Korean petrochemicals company, is considering manufacturing in Latin America rather than continue to concentrate its production in China, said Sang M. Lee, CEO of the company’s U.S. operations.
At the same time, the company is eyeing the Latin American market, especially as it moves into solar energy, Lee said after a Wednesday morning at the World Economic Forum dedicated to the future of Asian-Latin American relations.
“We need that new production because there are a lot of resources in Latin America, and we need more markets,” Lee said. “We’re just at a beginning stage with this.”
To be seen is whether the rising Asian investment will quiet concerns around Latin America that exporting commodities while importing manufactured Asian goods will ruin domestic companies and leave the region vulnerable. Brazil, in particular, has raised import tariffs on manufactured goods to protect its own industries.
Peruvian Trade and Tourism Minister Jose Luis Silva Martinot made clear Wednesday that despite the economic benefits from Asian trade and investment, Peru still sees China and other Asian countries as competitors.
“We can see they’re up scaling the quality of their products,” Silva said. “Three-quarters of our exports are raw materials. It’s something we want to change.”
Japan
Employers in the U.S. added fewer jobs than forecast in March, underscoring Federal Reserve Chairman Ben S. Bernanke