-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WOcmrdjfvorRhdVdZkVuhnMEgMxIRDOeNdhnnkX/NzG0acgx43dmddkvcVGjmpg0 Pfi4kYRQBXBAsvhb6GOOhA== 0000890163-99-000093.txt : 19990315 0000890163-99-000093.hdr.sgml : 19990315 ACCESSION NUMBER: 0000890163-99-000093 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990131 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990312 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMPLETE WELLNESS CENTERS INC CENTRAL INDEX KEY: 0001022828 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISC HEALTH & ALLIED SERVICES, NEC [8090] IRS NUMBER: 521910135 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-22115 FILM NUMBER: 99564388 BUSINESS ADDRESS: STREET 1: 666 11TH ST N W SUITE 200 CITY: WASHINGTON STATE: DC ZIP: 20001 BUSINESS PHONE: 2026399700 MAIL ADDRESS: STREET 1: 666 11TH STREET N W STREET 2: SUITE 200 CITY: WASHINGTON STATE: DC ZIP: 20001 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT: March 10, 1999 Complete Wellness Centers, Inc. - -------------------------------------------------------------------------------- (Exact Name of Registrant as specified in its Charter) Delaware 0-22115 52-1910135 - -------------------------------------------------------------------------------- (State or other jurisdiction (Commission File No.) (I.R.S. Employer or corporation) Identification No.) 666 11th Street, NW, Suite 200 Washington, D.C. 20001 - -------------------------------------------------------------------------------- (Address of Principal (Zip Code) Executive Offices) Registrant's telephone number, including area code: (202) 639-9700 -------------- - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report) ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT (a) On March 4, 1999 the Registrant terminated Ernst & Young LLP ("E&Y"), as the Registrant's independent public accountants and auditors, a capacity in which that firm had served for approximately three years, and selected Amper, Politziner & Mattia to replace E&Y in this role. The decision to change the Registrant's accountants and auditors was approved by the full Board of Directors. During the most recent fiscal year and the subsequent period through March 4, 1999, the date on which E&Y was terminated as the Registrant's independent public accountants and auditors, there were no disagreements between the Registrant and E&Y on any matter relating to accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which if not resolved to E&Y's satisfaction would have caused it to make reference to the subject matter of disagreement in connection with its report. In addition, Ernst & Young, LLP's report on the Registrant's financial statements for the fiscal year ended December 31, 1997 contained no adverse opinions or disclaimers of opinion, nor were such reports qualified as to audit scope or accounting principles. No "reportable events" as defined in Item 304(a)(1)(v) of Regulation S-K occurred during the Registrant's two most recent fiscal years and the subsequent interim period through March 4, 1999. In connection with its 1997 year-end audit of the Registrant's financial statements, in March 1998, E&Y presented a report to the Audit Committee of the Board of Directors of the Registrant describing certain material weaknesses, referred to below, in the Registrant's internal control structure. The Registrant carefully reviewed its internal controls in light of E&Y's report and in view E&Y's recommendations. In response to the foregoing the Registrant implemented a program to address this problem. The details are as follows: * Complete the current computer system network which will allow CWC to automatically source from each clinic the financial and operational data required for timely and accurate reporting. * Alter the clinic programs to include a "bug" which will cause the software to lock-up if access to the data is not permitted by the clinic. * Freeze the clinic lock-box and withhold all cash after a warning letter from corporate counsel when a clinic is non-compliant in submitting or allowing access to financial or operating data. * Compare on a timely basis all financial and operational results to the approved corporate budget and require detailed explanations for any significant variances from that budget. * The addition of appropriate personnel to the corporate staff, within budget guidelines, to analyze and report data to management in a timely manner. * Establish an executive committee, comprised of the appropriate subsidiary and corporate managers, which meets once a month to review all corporate guidelines and processes to ensure established policies are adhered to. 1. E&Y recommended that the Registrant establish a mechanism or procedures that will enable management to obtain timely financial and operational information from its affiliated entities (i.e. automatic freeze of the Medcorp's lock-boxes if complete information is not provided with a certain time period or late submissions are a routine occurrence, require all Medcorps to use wide area network and approved software to track and account for all transactions, increase frequency and breadth of CWC employees' site visits, etc.) and, evaluate its existing affiliates and Medcorps to determine which, if any, should be deemed non-compliant and the affiliation agreement terminated. 2. E&Y recommended that the Registrant adopt a uniform set of billing practices at all clinics and that compliance with those practices be monitored through a routine inspection program by corporate level employees or designees (i.e. and internal audit function). In addition, they recommended that the enforcement should be such that any Medcorp not following Registrant's policies should be subjected to (i) increased review (i.e. on-site vs. off-site, monthly or bi-monthly reviews of billing practices depending on the level of non-compliance, etc.), (ii) incur additional financial and operational oversight by the Registrant, and (iii) be subjected to management's review of the appropriateness to continue the Medcorp's affiliation with the Registrant's. In response to the foregoing, the Registrant has implemented a program to provide better teaching, a higher percentage of chart reviews, more site visits, "whistle-blower" rewards and an internal/external audit of patient records on a quarterly basis. Additionally, the Registrant established an executive review committee whose responsibility is to decide whether to suspend operations of any clinic that is not in compliance with the Registrant's established billing policies. The Registrant has authorized E&Y to respond fully to the inquiries of Amper, Politziner & Mattia. The Registrant has provided E&Y with a copy of the disclosures contained in this Form 8-K, and has requested that E&Y furnish the Registrant with a letter addressed to the Securities and Exchange Commission stating whether it agrees with the statements made by the Registrant herein. (b) As stated above, on March 4, 1999, the Registrant appointed the accounting firm of Amper, Politziner & Mattia as the Registrant's independent public accountants and auditors, effective immediately. During the Registrant's two most recent fiscal years and the subsequent interim period through March 4, 1999, Amper, Politziner & Mattia was not consulted with respect to any of the items referred to in Item 304(a)(2) of Regulation S-K. Item 7. EXHIBITS Exhibit 16.1 Letter from Ernst & Young, LLP to the Securities and Exchange Commission concerning its termination as the Registrant's principal accountant. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned thereto duly authorized. Date: March 10, 1999. Complete Wellness Centers, Inc. By: /s/ Joseph Raymond, Jr. ------------------------- Joseph Raymond, Jr. Chairman & CEO Exhibit 16.1 March 10, 1999 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Re: Complete Wellness Centers, Inc. File No. 0-22115 Gentlemen: We have read Item 4 of Form 8-K of Complete Wellness Centers, Inc., dated March 10, 1999, and agree with the statements contained therein. Very truly yours, /s/ Ernst & Young LLP -----END PRIVACY-ENHANCED MESSAGE-----