Dialysis centers settle fraud suit for $486 million
March 1, 2000 4 minutes read
Dialysis centers settle fraud suit for $486 million
Settlements will only get bigger, experts say
The largest health care settlement in the history of the U.S. Department of Justice (DOJ) has yielded $486 million from a national chain of kidney dialysis centers. One attorney involved in fraud litigation says the settlement "raises the bar as far as future settlements go," suggesting an upward trend in the amount of money awarded.
The settlement with the Massachusetts-based National Medical Care includes a criminal fine of $101 million for wide-ranging misconduct, according to a DOJ statement. The agreement also includes $385 million in civil fines, penalties, and restitution for fraud related to Medicare and other government health care programs, the statement says. Whistle-blowers will collect $65.8 million of the $385 million civil recovery.
Landmark recovery’ is a success story
The settlement includes allegations that company officials used Medicare and other government health insurance programs to pay for hundreds of needless tests for patients suffering from kidney disease, officials said. Company executives also obtained referrals of lab business by paying kickbacks, a violation of anti-kickback statutes, officials say. National Medical Care is owned by Fresenius Medicare Care AG (FMS), a German company that is the world’s largest provider of dialysis products and services.
"Today’s landmark recovery comes as one more example of success in our fight against health care fraud, which has been a priority at the Justice Department since 1993," said Eric Holder Jr., deputy attorney general.
The government’s involvement is a key point, says Stephen Meagher, JD, an attorney with Phillips & Cohen in San Francisco. The firm specializes in representing whistle-blowers in False Claims Act cases and is responsible for about two-thirds of the $1.3 billion the government has collected through whistle-blower lawsuits in the past five years. "This case sends the message that false claims cases in which the government intervened are likely to have a large outcome," he says. "The numbers are going up, and that’s generally a good thing. This settlement raises the bar in terms of what we might expect from future cases."
June Gibbs Brown, inspector general of the U.S. Department of Health and Human Services in Washington, DC, called the investigation and settlement "an excellent example of multiple law enforcement agencies working together on a long, complex Medicare fraud investigation. We are committed to working with our partners to investigate these complicated schemes, to hold the responsible parties accountable, and to return ill-gotten gains to the Medicare Trust Fund."
Brown notes that as part of the settlement, Fresenius has agreed to the most comprehensive corporate integrity agreement ever imposed on a company doing business with federal health care programs. The corporate integrity agreement requires Fresenius to conduct mandatory compliance activities, including special audits and training, to help prevent this kind of misconduct from recurring. Typically, corporate integrity agreements run for five years, but the Fresenius agreement will last for eight years and covers every aspect of the company’s future business with federal health care programs.
Size of settlement could strike fear
The huge number could trigger fear among health care professionals who have been trying to anticipate paying on their fraud cases, Meagher says. National Medical Care had reserved $2 million for settling this case, so they got a big surprise when it came to the actual payout, he says. Others could experience the same shock.
"Columbia HCA has a billion dollars in reserve for their own fraud case, so you have to wonder if they’re going to be covered or their own payout will be much bigger," Meagher says. "For those in the health care fraud community, the message is that the money you set aside is not necessarily what it’s going to be. It can grow much larger."
Other than the huge settlement, Meagher says there was nothing especially novel about the case. "It’s been known for a long time that end-stage renal disease was an area where the government was getting royally ripped off," he says.
Some attorneys are starting to worry that the government is going to start pushing for more criminal fines, he says, because the whistle-blowers don’t share in that part of the settlement.
"I gather from what I’m told that the whole thing has been fraught with nastiness for a while, with people expecting the government to start leveraging the size of criminal fines in an attempt to keep more of that money for themselves," he says.
Though the settlement is the biggest to date in health care, a landmark for that reason alone, Meagher compares it to Dow Jones crossing the 10,000 mark. The number is significant, but it almost certainly will be surpassed, he says.
"We see other things in the pipeline that will continue the trend in big money for the government," he says. "The big one, of course, is Columbia. They’ve put aside letters of credit favoring the government to the tune of a billion dollars. Even if it doesn’t go beyond that, that will be a huge settlement. And the other lesson is that even though these things take years, they do get settled eventually."
Source
o Stephen Meagher, Phillips & Cohen, 50 California St., 31st Floor, San Francisco, CA 94111. Telephone: (415) 765-9300.
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