Consumer Fraud

The Fraud List: Fresenius Medical Care milks Medicaid with dialysis empire

the fraud list 370x210 The Fraud List: Fresenius Medical Care milks Medicaid with dialysis empireFresenius Medical Care is the largest provider of kidney dialysis services and products in the U.S. The company’s North America division treats more than 170,000 patients in 2,200 dialysis clinics located in 50 states and territories. Many of Fresenius patients are Medicare beneficiaries who require dialysis to treat end-stage kidney disease and other chronic illnesses, which means that the company submits several thousand reimbursement claims to the Medicare program every year.

On May 26, 2011, federal authorities announced a settlement between Fresenius, its affiliated companies, and the U.S. government, which underscored how fraud became almost institutionalized, reaching into the upper levels of management and rendering all of the company’s Medicare claims as false billings.

Under the terms of the settlement, Fresenius, Renal Care Group, and Renal Care Group Supply Company agreed to pay the U.S. nearly $83 million to resolve allegations of illegal Medicare billing activity rampant in the company. Fresenius and Renal Care Group have since merged to form one company.

A federal investigation of the company was triggered by the concerns of several Renal Care Group employees who knew the company’s billing practices violated the law. One regional company manager who complained about the company’s operations told investigators, “I do not wish to go to jail” because of the company’s practices, which were “not made in the best interests of the patients.”

The court also found that the company failed to heed the advice of its own lawyers, who warned administrators about the way it ran its supply company and also found that 100 percent of the company’s files were missing information that Medicare required for billing.

Double dipping

Under federal law, companies that provide dialysis to Medicare patients and bill Medicare for those treatments are prohibited from providing the medical supplies needed for the treatments. Should companies provide both dialysis treatments and supplies, they are prohibited from seeking reimbursement from Medicare for those services and products.

According to the U.S. Justice Department, the defendants also “set up a sham billing company” that violated U.S. laws and interfered with dialysis patients’ choice of supply options, requiring them to use only those made or supplied by Renal Care Group Supply Company. The company persisted in these practices because of the illicit revenue the misconduct generated, the Justice Department said, even after several employees voiced their concerns.

According to a Justice Department announcement, the companies “recklessly disregarded the law” in this manner from 1999 through 2005.

Incredibly, the $82.64-million settlement wasn’t the first for Fresenius, nor was it even the largest.

Tapping Medicare for years

On January 19, 2000, Fresenius Medical Care of North America agreed to pay the U.S. government $486 million to settle civil and criminal fraud charges targeting Medicare and other taxpayer-funded U.S. health care programs.

Nine people filed whistleblower complaints against Fresenius, triggering a sweeping federal investigation that led to the indictments of three Fresenius officials and criminal convictions of two former Fresenius executives.

Under the settlement, Fresenius agreed to plead guilty to criminal conspiracy charges involving three of its units: LifeChem Inc. laboratories; NMC Homecare Inc.; and NMC Medical Products Inc.

Federal prosecutors accused the three units of conspiring to defraud government health care programs by billing it for ineligible intravenous feeding administered to dialysis patients; billing it for unneeded blood tests, and violating federal anti-kickback laws by paying potential customers of the LifeChem blood-testing unit with incentives in the form of money, valuable discounts, yachting voyages, and hunting expeditions in Alaska.

The whistleblower lawsuits, which the government chose to back, also accused NMC Homecare of bilking more money out of Medicare by falsely attributing weight loss in its patients to kidney disorders, even going so far as recording one patient’s weight loss after a leg amputation as a kidney-related problem.

After the settlement, Fresenius sold its home care unit. The terms of the settlement also required LifeChem and NMC Medical Products to close. Fresenius shifted their functions to its Spectra Labs unit and its Germany-based parent company’s product lines. The settlement also required Fresenius to enter a stringent corporate integrity program that included conducting special compliance audits and employee training over an eight-year period.

At the time, the Justice Department said that the Fresenius civil settlement of $385 million and $101 million in criminal fines was the largest in a five-year government crackdown on fraud involving blood-testing labs and other health care companies.

Despite Fresenius’ integrity agreement, the company continued to run afoul of federal laws and regulations. Taxpayers Against Fraud notes that the company and its subsidiaries have been involved in numerous False Claims Act cases since 2000.

In fact, little more than two years had passed since the $486-million settlement when Fresenius settled another whistleblower lawsuit for $1.6 million. John Hamel, a former employee of the company’s NMC unit, sued the company on behalf of the U.S. government, claiming it billed Medicare, Medicaid, Tricare, and the Federal Employees Health Benefits Program for experimental drugs that it had provided for use in clinical trials free of charge.

Coming Up Next:

Next week’s installment of The Fraud List will feature another repeat offender of the False Claims Act, DaVita Healthcare Partners, Inc. A new story in this series will be published each Thursday. Follow #thefraudlist on Google+, Facebook and Twitter.

Sources:

F.B.I. / U.S. Attorney’s Office: United States Awarded $82 Million in a Medicare Fraud Case Against Renal Care Group and Fresenius Medical Care

F.B.I. / U.S. Attorney’s Office: Nashville Medicare Supply Company Ordered to Pay More Than $19.3 Million in Damages for Violation of the False Claims Act and for Unjust Enrichment 

New York Times

Fresenius Medical Care

U.S. Department of Justice

Taxpayers Against Fraud