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Fresenius Must Pay $82.6 Million to Settle Medicare Billing Suit

Fresenius Medical Care AG, accused of overbilling Medicare, was ordered by a judge to pay $82.6 million to resolve a lawsuit by the U.S. government and whistleblowers.

Fresenius, the world’s biggest provider of kidney dialysis, must pay trebled damages of $38.9 million under the False Claims Act and statutory penalties of $43.7 million, U.S. District Judge William J. Haynes ruled May 25 in Nashville, Tennessee. The decision was made public yesterday.

The lawsuit claimed that two companies now owned by Fresenius, Renal Care Group and Renal Care Group Supply Co., overbilled Medicare between 1999 and 2005 for home support dialysis supplies. RCG, a dialysis facility, violated Medicare statutes by billing for home dialysis supplies when it should have billed at the lower rate for clinics, the U.S. claimed.

Terry Morris, a spokeswoman for Fresenius, based in Bad Homburg, Germany, said the company just received the decision and would issue a statement.

“By the imposition of trebled damages and statutory penalties, it demonstrates the deterrent effect of whistleblower cases,” said plaintiffs’ attorney Eric Young, of Blue Bell, Pennsylvania. “It should put all defendants on notice that if they commit Medicare fraud, there will be serious consequences.”

Two Whistleblowers

Young represents the two whistleblowers in the case, Julie Williams and Dr. John Martinez. In 2005, they sued under the False Claims Act, which lets private citizens sue on behalf of the government and share in any recovery. The U.S. Attorney’s Office in St. Louis joined the case in 2007 and continued to work on it after it was transferred to Nashville.

In March 2010, Haynes ordered Fresenius to pay $19.4 million. The company asked the 6th U.S. Circuit Court of Appeals to overturn that ruling. That court dismissed the appeal. The government then asked Haynes to impose trebled damages and maximum penalties of $11,000 for each allowable claim under the False Claims Act.

In his ruling, Haynes granted that motion, reducing the overpayment damages from $19.4 million to $12.9 million, which he tripled. He also said the company falsely billed for 3,979 patients over four years.

The case is Williams v. Renal Care Group, 09-cv-738, U.S. District Court, Middle District of Tennessee (Nashville).

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