Court Orders Kidney Dialysis Equipment Suppliers To Pay Over $19 Million For Reckless Disregard Of Medicare Regulations

On March 23, 2010, a federal district court in Nashville, Tennessee ordered Renal Care Group, Renal Care Group Supply Company, and Fresenius Medical Care Holdings, Inc. to pay the United States over $19 million for False Claims Act violations due to reckless disregard of Medicare regulations when billing the government for home dialysis supplies.  The court ruled that reckless disregard of Medicare regulations is sufficient to prove a violation of the False Claims Act and that specific intent to defraud is not required.  The government’s complaint alleged that that from January 1999 to December 2005, the defendants submitted claims to Medicare for reimbursement of home dialysis supplies provided to patients suffering from End-Stage Renal Disease and that these claims were false because defendants were prohibited and not qualified to bill Medicare for these patients.  Medicare reimburses companies that provide supplies to End-Stage Renal Disease patients only if the company that provides the supplies is truly independent from dialysis facilities.  According to the government, the defendants set up a sham-billing company, Renal Care Group Supply Company, that was not independent from Renal Care Group and that Renal Care Group interfered with patients’ choice of supply options, requiring patients to “move” to Renal Care Group Supply Company.  The Court’s opinion noted that Renal Care Group failed to heed the advice of its attorneys regarding this arrangement.  Further, an internal audit found that 100% of its files were missing information that Medicare required in order to bill the government for these supplies.  The Court’s opinion also cited a statement from one of the defendants’ employees who wrote “I do not wish to go to jail” and that the defendants’ plans to move patients into the Renal Care Group Supply Company “was not in the best interests of patients.”

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