Business news briefs for May 11, 2004

Tuesday, May 11, 2004 | 11 a.m.

Three arrested in alleged scam

LOS ANGELES -- Three Californians were arrested Monday on charges of running a health insurance provider that left more than $30 million in unpaid claims for medical services when it was shut down, prosecutors said.

A federal grand jury issued a 37-count indictment against James Graf, 43, who operated Employers Mutual LLC; William Kokott, 60, an owner of Employers Mutual; and Kari Hanson, 43, who called herself the director of operations for the company, the U.S. attorney's office in Los Angeles said.

Soaring health insurance premiums have sparked a rise in bogus health insurance plans. Such scams resulted in $252 million in unpaid medical claims over three years, the General Accounting Office said in a March report. Employers Mutual, which sold more than 20,000 policies nationwide, was singled out by congressional auditors as one of the largest frauds.

LV firm pays back overtime

MC Communications Inc., a Las Vegas cable TV installation contractor for Cox Communications, has paid $141,495 in back wages to 181 employees following a U.S. Department of Labor investigation into overtime pay irregularities.

The Labor Department on Monday said the company was accused of incorrectly calculating some overtime pay, failing to record some overtime hours and not paying some workers time and a half for some work performed beyond 40 hours per week.

An MC Communications official could not be reached for comment.

The $141,495 settles a complaint filed by the Labor Department and will compensate the workers for work performed during a two-year period ending in December.

Loss widens as suit filed

SAN DIEGO -- Gateway Inc., which bought rival EMachines Inc. to revive sales, Monday said its first-quarter loss widened to 51 cents a share from 49 cents because of costs related to efforts to settle a patent-infringement case.

The net loss widened to $171.5 million from $165.5 million reported on April 29 when the company released preliminary results, Poway, Calif.-based Gateway said in a filing with the U.S. Securities and Exchange Commission.

Gateway boosted a reserve fund related to negotiations to settle an undisclosed patent-infringement claim, the company said in a statement. The settlement doesn't involve Hewlett-Packard Co., which is suing Gateway over patents, spokesman Bob Sherbin said.

Gateway Inc. said Monday that it filed a patent infringement lawsuit against Hewlett-Packard, alleging that the computer hardware and software company violated five of its patents.

Company announces loss

MCLEAN, Va. -- MCI, the scandal-ridden company once known as WorldCom, reported a quarterly loss of $388 million Monday and said it will eliminate 7,500 jobs this year, or about 15 percent of its work force.

The earnings report was the first for MCI since it emerged from bankruptcy last month.

The $388 million loss compared to a profit of $52 million in the year-ago quarter. The company said the weaker performance stemmed from intense price competition in the industry.

The company said it expects to eliminate the jobs in the second half of the year. MCI currently has about 50,000 workers, and in March announced layoffs of about 4,500 workers.

The company did not specify what jobs would be cut and what locations would be affected.

COO McRee named president

FRANKLIN, Tenn. -- Iasis Healthcare Corp., parent company of Lake Mead Hospital in North Las Vegas, announced today that Chief Operating Officer Sandra McRee has been promoted to president of the company.

David White, who had been president, will remain chairman and chief executive of the company.

McRee joined Iasis in May 2001 as chief operating officer. Previously, she had served as regional vice president of operations for Province Healthcare.

Earlier this month, buyout firm Texas Pacific Group announced an agreement to buy Iasis for about $1.4 billion.

Automaker reports profit surge

TOKYO -- Toyota Motor Corp. said today its profit for the latest fiscal year surged 55 percent, making Japan's biggest automaker the nation's first company to earn more than 1 trillion yen in a single year.

Toyota said its record earnings performance for the year ended in March reflected booming sales in nearly all regions across the world. It expects sales gains again this year.

Toyota's group net profit totaled 1.16 trillion yen ($10.2 billion), up from its previous record profit of 751 billion yen a year ago.

Sales climbed 12 percent to 17.3 trillion yen ($152 billion) from it previous high mark of 15.5 trillion yen in fiscal 2002.