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February 27, 2014 Healthcare Fraud

Department of Justice Combats Growing Trend of Fraud in the Dialysis Industry

In yesterday’s post, we discussed the recent onslaught of fraud in the kidney dialysis industry. In a recent $389 million settlement involving dialysis clinic company DaVita Healthcare Partners, the federal government put a stop to a lucrative but illegal kickback scheme involving equity-for-referral agreements between the defendant and several kidney doctors. More specifically, DaVita offered nephrologists ownership interests in several DaVita clinics for below-market value, presumably in exchange for the promise to refer as many patients as possible to the clinics for dialysis services.

In today’s post, we explore some other dialysis fraud cases plaguing the U.S. healthcare industry and introduce you to some of the names to watch for as more and more dialysis fraud cases come to light. Over the years, the U.S. government has recovered hundreds of millions of dollars from clinics, doctors, and medical suppliers surrounding fraud in this industry – and the trend does not seem to be subsiding any time soon.

Fresenius Medical Care

Fresenius Medical Care is one of the most prominent fixtures in the dialysis industry and provides medical supplies to dialysis clinics and home dialysis patients across the globe. Over the past several years, it has been exposed to significant liability over its use of certain drugs during the dialysis process. These drugs, specifically known as Naturalyte and Granuflo, were recalled by the FDA in March 2012 over safety concerns.

It was later revealed through a leaked internal memo that Fresenius was aware of the increased risk of cardiac arrest linked to these drugs and even knew about 941 cardiac incidents involving these chemicals. It wasn’t until the FDA’s recall occurred that Fresenius issued its own warning to dialysis centers as to the dangers of these drugs. The company is facing ongoing wrongful death and personal injury liability from these fraudulent cover-ups.

Fresenius and several other dialysis companies agreed to pay over $80 million to settle allegations of improper Medicare billing for home dialysis services in 2012. Many of these companies maintain internal auditing and compliance procedures. However, when the Department of Justice performed its investigation, it discovered that the companies’ own records revealed that nearly all records pertaining to Medicare or Medicaid patients were missing from the files.

U.S. Renal Care

In another dialysis-linked settlement, U.S. Renal Care remitted over $7.3 million to settle allegations it knowingly overbilled Medicare for the drug Epogen – a synthetic drug used to aid in the production of red blood cells. The drug was known to adhere to the sides of a syringe, thereby making it impossible for medical personnel to extract the full amount from the needle. The manufacturer of Epogen, Amgen, purposely overfilled the vials by 11 percent to accommodate this issue, assuming medical personnel would throw away the vials after each use. According to allegations, U.S. Renal Care was actually billing Medicare 11 percent more for the Epogen, despite the fact that the manufacturer intended the overage to be included in the cost of the product.

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