Fresenius tagged with record FCA settlement

Fresenius Medical Care, the world's largest provider of kidney dialysis products and services, entered into the largest health care fraud settlement ever Jan. 19, when it agreed to pay the U.S. government a staggering $486 million to settle an investigation of National Medical Care (NMC), its kidney dialysis subsidiary. The agreement was announced at the U.S. Courthouse in Boston by Department of Health and Human Services Office of Inspector General June Gibbs Brown and Deputy Attorney Eric Holder.

In all, three NMC subsidiaries agreed to plead guilty to three separate conspiracies and hand over a record $101 million in criminal fines. Fresenius also agreed to pay a record $385 million to resolve related civil False Claims Act claims. The whistle blowers in the case will pocket a tidy $65.8 million.

Also as part of the settlement, Fresenius agreed to withdraw approximately $196 million in intradialythic parenteral nutrition (IDPN) therapy claims it currently has on appeal or waiting to be filed with Medicare in return for a $59.1 million payment from the U.S. government.

In its complaint, the government laid out a detailed and calculated effort on the part of NMC to defraud Medicare. IDPN, a nutritional therapy provided intravenously to dialysis patients, was one of NMC's most profitable products, and in some years accounted for virtually all of the company's profits.

Medicare, the principal source of NMC's reimbursement, covered IDPN under the prosthetic device benefit only if the patient suffered from a severe pathology of the alimentary tract that did not allow absorption of sufficient nutrients. It was not covered as supplemental nutrition even if it was prescribed by a physician to treat malnutrition.

According to the government, NMC organized an IDPN Task Force in 1989 to prepare paperwork to bill old, previously unbilled, or denied IDPN claims, even though many of the patients lacked the clinical indications mandated by Medicare. The government charges that when NMC discovered that medical documentation for many patients was lacking, it instructed the Task Force to use "clinical creativity" to prepare the required documentation.

The government alleges that in 1993, NMC directed its IDPN coordinators to use a new sample calculation tool for existing patients. It said NMC would start with the final number desired and then fill in the time estimates needed to reach that number.

The mammoth settlement comes after an exhaustive five-year investigation. As part of the agreement, Fresenius, which merged with NMC in 1996, also agreed to the most comprehensive corporate integrity agreement (CIA) ever imposed on a company doing business with the federal health care programs.

The CIA requires Fresenius to conduct mandatory compliance activities, including special audits and training to prevent recurring problems. While these agreements typically run five years, the Fresenius agreement will last for eight years and cover every aspect of the company's future business with the federal health care programs.