The Scooter Store files for bankruptcy while under investigation for overbilling Medicare, Medicaid

The Scooter Store, which ran late-night commercials implying that many people could get “free” motorized wheelchairs paid for by taxpayers and profiting the company has filed for bankruptcy after a federal investigation found the company overbilled Medicare and Medicaid by between $47 million and $88 million from 2009 to 2011.

The company spent years greasing the palms of politicians, perhaps to keep lawmakers from taking a hard look at Medicare eligibility and the for-profit companies that engage in doctor shopping and aggressive advertising.

It gave $86,273 to federal politicians in the 2012 election cycle and was a top source of funds for 19 members of Congress, split along party lines, according to the Center for Responsive Politics. Since 2007, it has given $473,000 to politicians, and spent nearly $4 million on lobbying since 2004, with former Rep. Nancy L. Johnson, Connecticut Republican, as its lobbyist.

The Scooter Store was clear about what it sought to fend off, lobbying against legislation titled “a bill to amend title XVIII and XIX of the Social Security Act to curb waste, fraud, and abuse in the Medicare and Medicaid programs,” records show. That bill, sponsored by Sen. Thomas R. Carper, Delaware Democrat, died in committee.

The FBI raided the Scooter Store’s Texas headquarters last month. Two weeks after that raid, Scooter’s CEO Martin Landon sent an email to employees telling them not to return to work until further notice. The company’s scooters and power chairs retail from $879 for the Travel Scooter to $4,415 for the EV Rider Royale 4 Wheel Scooter.

The company had agreed to repay the government $20 million to settle the overpayments, which were up to $88 million money the government will now have to try to recover in bankruptcy proceedings. The company’s 30 creditors also include half a million dollars to Google and $206,000 to Yahoo for advertising

Sen. Tom Coburn, Oklahoma Republican, said “durable equipment” routinely goes to people who do not need it and the government doesn’t have the tools it needs to fully recover losses when pushers are overpaid by the government.

“The Inspector General has issued a pointed critique of the Medicare program’s inability to fully collect overpayments to suppliers who were paid too much by the program,” Mr. Coburn said in a statement. “Medicare officials must do a better job of protecting taxpayer dollars from errant payments, and Congress should continue to conduct oversight to ensure Medicare officials are using efficient and effective practices.”

On Wednesday, the Senate Subcommittee on Financial Contracting and Oversight, chaired by Missouri Democrat Claire McCaskill, will hold a hearing on “oversight and business practices of durable medical equipment companies.”

The Scooter Store was founded in 1991 and has headquarters in New Braunfels, Texas, with a “national network of specialists” and locations in 48 states. Doug and Susanna Harrison founded the store on what their website says was their goal to “Always Do the Right Thing.” It had as many as 2,500 employees.

A call to the company’s headquarters was greeted with a recorded messaging saying the company “is currently unable to take any new orders at this time.”