Federal court slaps Nashville-based Medicare supply company with enormous damages and penalties

April 23, 2010  |  Class Actions, Whistleblower/Qui Tam

In a whistleblower lawsuit filed under the federal False Claims Act, a federal judge has imposed enormous damages and penalties on companies furnishing medical supplies to patients with advanced kidney disease.  The defendants in the suit were Renal Care Group (RCG) and Fresenius Medical Care (FMC), with which RCG had merged.  RCG’s home was Nashville, Tennessee, but the company had operations in many states, including St. Louis, where the whistleblower lawsuit was originally filed before it was transferred to Tennessee.

RCG provided kidney dialysis for patients with End-Stage Renal Disease (ESRD), a medical condition requiring kidney dialysis to remove toxins from a patient’s blood.  Medicare customarily provides coverage for dialysis services and for dialysis supplies for patients with ESRD.  Under federal law, however, Medicare will only pay for ESRD dialysis supplies when the companies providing the supplies are actually independent from the dialysis facilities and when the patient elects to receive dialysis supplies from that independent company.  The lawsuit charged that RCG established a sham billing company for supplies, RCG Supply Company (RCGSC), that in fact was not independent.  RCG then interfered with patients’ choice of supply providers by purporting to require patients to use RCGSC for their supplies.  For seven years from January 1999 to December 2005, RCGSC improperly submitted false claims to Medicare for home dialysis supplies to patients with ESRD because the sham company was not qualified to bill Medicare for such services.

U.S. District Judge William J. Haynes, Jr. seemed particularly disgusted by evidence that RCG ‘s own employees responded to the company’s directive for converting patients to RCGSC by protesting that the scheme was not in the patients’ best interest and could send company employees to jail.  Further, RCG refused to follow its own lawyers’ advice concerning the supply company.

For the full story, go to Market Watch.

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