healthy4u: Fresenius

Fresenius Fined $82 Million for False Claims

We open the week with yet another story of a large health care organization found by the judicial process to have misbehaved. Here is the story, <a href="http://www.infozine.com/news/stories/op/storiesView/sid/47599/">courtesy</a> of the Kansas City InfoZine: <blockquote>The United States Attorney’s Office announced that a federal judge has entered a judgment of $82,642,592 in favor of the United States in a 'whistleblower' lawsuit originally filed in the federal district court in St. Louis in 2005, and then transferred to the federal district court in Nashville, Tennessee. The lawsuit claimed that Renal Care Group, Renal Care Group Supply Company and Fresenius Medical Care Holdings, Inc. recklessly disregarded federal law when billing the Medicare program for home dialysis supplies and equipment during 1999-2005.</blockquote> The judge's reasoning was apparently based on some colorful facts, <blockquote>The Court's orders in this case discuss the concerns of multiple Renal Care Group employees who complained about the operation and Medicare billing activity of the Renal Care Group Supply Company, including one regional manager who wrote, 'I do not wish to go to jail,' and felt the company 'was not in the best interests of patients' after receiving a corporate directive about converting patients into the Renal Care Group Supply Company. The Court further noted that Renal Care Group failed to heed the advice of the company's lawyers when operating the supply company and also discussed an internal audit of the supply company that found that one hundred percent of the company's files were missing information that Medicare required for billing. Renal Care Group ('RCG') was a publicly traded for-profit corporation and dialysis provider until it merged with dialysis industry competitor Fresenius Medical Care ('FMC'). RCG had its principal place of business in Nashville, Tennessee, and had locations throughout Missouri, including multiple facilities around the St. Louis metropolitan area. RCG Supply Company ("RCGSC") was a Tennessee corporation that was owned and operated by RCG.</blockquote> Note further the allegations of the mechanics of the misbehavior, as alleged by the government prosecutors: <blockquote>The Government's complaint alleged that between January 1999 and December 2005, RCGSC submitted claims to the Medicare program for home dialysis supplies provided to ESRD patients for reimbursement of the supplies and equipment. All of these claims, as well as related claims for support services rendered by RCG dialysis clinics were false because the defendants were prohibited from and not qualified to bill Medicare for these home dialysis patients. Under federal law, the Medicare program pays companies that provide dialysis supplies to ESRD patients only if the companies that provide the supplies are truly independent from dialysis facilities and the ESRD patient chooses to receive supplies from the independent supply company. Defendants set up a sham billing company, RCGSC, that was not independent from RCG. Further, RCG interfered with ESRD patients' choice of supply options, requiring patients to 'move' to RCGSC. Even after RCG employees raised concerns and industry competitors closed their supply companies, RCG kept RCGSC open because of the illicit revenue it created.</blockquote> Note further that we discussed an earlier judgment in this case, which has now been superseded, <a href="http://hcrenewal.blogspot.com/2010/03/settlement-and-conviction-round-up.html">here</a>. So here we go again: yet more misbehavior, yet another multi-million dollar fine, but no real live person suffers a negative consequence.   Almost daily, there are stories about criminal convictions for relatively small scale health care fraud, kickbacks, bribery, etc that often result in the perpetrators going to jail or paying potentially bankrupting fines. However, when misbehavior, including fraud, kickbacks, bribery is on a big scale, almost never does an individual pay a penalty. We have seen lots of stories of big corporations paying big fines like this (e.g., look <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">here</a>.)  However, in a world where those who authorize, direct, or implement misbehavior that makes the company money can get big pay, do we really expect that fines assessed against the company itself, whose costs can be passed on to the employees at large, customers, and shareholders will have any deterrent power? It is interesting that this latest case occurred around the same time that yet another breathless story appeared in the media about how the US government is about to get tough with executives whose companies misbehave.  The Associated Press ran <a href="http://www.google.com/hostednews/ap/article/ALeqM5jIGsUXYEAKspVXkeAdCDNumbbNFA?docId=d620a807289f47a6b01dfe728972a0b3">a story</a> claiming: <blockquote>Previously, if a company got caught, its lawyers in many cases would be able to negotiate a financial settlement. The company would write the government a check for a number followed by lots of zeroes and promise not to break the rules again. Often the cost would just get passed on to customers. Now, on top of fines paid by a company, senior executives can face criminal charges even if they weren't involved in the scheme but could have stopped it had they known. Furthermore, they can also be banned from doing business with government health programs, a career-ending consequence.</blockquote> It included a quote by one government official with which I would agree. <blockquote>'When you look at the history of health care enforcement, we've seen a number of Fortune 500 companies that have been caught not once, not twice, but sometimes three times violating the trust of the American people, submitting false claims, paying kickbacks to doctors, marketing drugs which have not been tested for safety and efficacy,' said Lewis Morris, chief counsel for the inspector general of the Health and Human Services Department. 'To our way of thinking, the men and women in the corporate suite aren't getting it,' Morris continued. 'If writing a check for $200 million isn't enough to have a company change its ways, then maybe we have got to have the individuals who are responsible for this held accountable. The behavior of a company starts at the top.'</blockquote> I agree with the concept.  However, the AP story provided no evidence of a get tough policy newer than the case of the proposed "disbarment" from dealing with the government of the elderly CEO of Forest, which we discussed <a href="http://hcrenewal.blogspot.com/2011/04/will-pharmaceutical-ceo-finally-be-held.html">here</a>.  Although a year ago we <a href="http://hcrenewal.blogspot.com/2010/06/attempt-to-hold-health-care-leaders.html">discussed</a> threats by the US government to hold health care leaders accountable using the "Responsible Corporate Officer Doctrine," which has been available since 1943, so far there is no evidence that this concept has been made operational. So the march of <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">legal settlements</a>, and corporate convictions for <a href="http://hcrenewal.blogspot.com/search/label/bribery">bribery</a>, <a href="http://hcrenewal.blogspot.com/search/label/fraud">fraud</a>, and <a href="http://hcrenewal.blogspot.com/search/label/kickbacks">kickbacks</a> continue, but the problem does not go away.  In 2006, we <a href="http://hcrenewal.blogspot.com/2006/08/schering-plough-settles-again-again.html">wrote</a>, "It all is becoming so familiar, almost wearisome, yet the questions remain. Why do the mainly monetary penalties seem mainly to come out of the hides of stock-holders and consumers, rather than the people who actually made the decisions that lead to the offenses? And after all the indictments, prosecutions, settlements, and convictions involving large health care organizations, when will academics, policy makers and politicians, much less company CEOs and other organizational leaders admit we have a systematic problem here?" In 2008, we <a href="http://hcrenewal.blogspot.com/2008/09/walgreen-settles.html">wrote</a>, "As long as health care leaders can shrug off the consequences of unethical behavior merely as acceptable costs of doing business, absent any serious attempts to get health care organizations to enforce internal codes of ethical behavior or to avoid hiring ethically challenged leaders, the procession will likely continue. The effects will be continually rising costs, declining quality, shrinking access, and rising numbers of demoralized health professionals." I wonder what we will write about this in 2012?

Fresenius Fined $82 Million for False Claims

We open the week with yet another story of a large health care organization found by the judicial process to have misbehaved. Here is the st...

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The Settlement and Conviction Round-Up: Friday Frequent Flier Edition

It's time for one of our periodic round-ups of legal settlements and convictions of health care organizations.  This time, we report on three frequent fliers, in chronologic order of the appearance of the relevant news stories. Robert Wood Johnson University Hospital Hamilton (UMDNJ) We have written multiple times about the woes of the University of Medicine and Dentistry of New Jersey, which lead to a deferred prosecution agreement and operation under the watchful eye of a federal monitor for several years, and resulted in criminal convictions of a former Dean and the state legislative leader he hired.  Scroll through <a href="http://hcrenewal.blogspot.com/search/label/UMDNJ">this</a> for far too many details.  Now, the redoubtable Newark Star-Ledger <a href="http://www.nj.com/news/index.ssf/2010/03/hamilton_hospital_agrees_to_pa.html">reports</a>: <blockquote>Robert Wood Johnson University Hospital in Hamilton has agreed to pay $6.35 million to settle allegations that the facility defrauded Medicare, Justice Department officials said today. The Mercer County hospital was accused of inflating charges to Medicare patients to obtain bigger reimbursements from the federal government. 'Taxpayer dollars should go towards quality health care, not wasted on fraud and abuse,' said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. The hospital denied wrongdoing in the settlement, said Skip Cimino, the facility's president and CEO. 'Robert Wood Johnson University Hospital Hamilton has resolved the outstanding Medicare Reimbursement issue with the government and looks forward to continuing its service to the community,' he said.</blockquote> Note that Robert Wood Johnson Medical School is one of the two medical schools contained within UMDNJ. Fresenius I admit that we last <a href="http://hcrenewal.blogspot.com/2007/09/dialysis-providers-and-restraint-of.html">discussed</a> Fresenius Medical Care Holdings Inc, a for-profit provider of kidney dialysis services, a while ago, back in 2007. At that time, the company settled charges made by the US Federal Trade Commission that it had tried to restrain competition. Last week, the Tennessean reported: <blockquote>A long-running whistleblower complaint against the once-Nashville based Renal Care Group has led to a $19.3 million federal court judgment against the acquired dialysis supplier and the German company that bought it four years ago. The lawsuit, which focused on improper claims submitted to Medicare for home dialysis supplies, named Renal Care Group Supply Co. and Fresenius Medical Care Holdings Inc., as co-defendants. The federal government joined the whistleblower complaint more than two years ago. Renal Care operated a shell billing company solely to submit claims on behalf of itself in violation of federal law that requires suppliers to be independent of the dialysis facilities where patients are treated, the government said. Even after employees raised concerns, Renal Care continued to operate the billing company because of the 'illicit revenues it created,' the suit said. One employee wrote: 'I do not wish to go to jail' and felt the company's plan 'was not in the best interests of patients,' said federal Judge William J. Haynes Jr. of Nashville in his ruling. The billings reportedly occurred over a six-year period beginning in 1999. The Fresenius-Renal Care acquisition closed in 2006 at a sales price of $3.5 billion.</blockquote> Pfizer Pfizer Inc, which proclaims itself to be the world's largest pharmaceutical company, has provided an amazing amount of material for Health Care Renewal. In September, 2009, we <a href="http://hcrenewal.blogspot.com/2009/09/pfour-legal-settlements-for-pfizer-why.html">discussed</a> the huge, that is, $2.3 billion dollar settlement Pfizer made of criminal and civil fraud charges. At that time, this was the fourth settlement of charges of unethical marketing made by Pfizer since 2002. Since then, we have discussed <a href="http://hcrenewal.blogspot.com/2009/10/pfizer-in-guise-of-pharmacia-pfound-to.html">another fraud settlement</a> in October, 2009, <strike>and </strike><a href="http://hcrenewal.blogspot.com/2010/01/physician-pleads-guilty-to-fraud-for.html"><strike>yet another</strike></a><strike> in January, 2010</strike>. Today, Bloomberg <a href="http://www.businessweek.com/news/2010-03-26/pfizer-told-to-pay-142-1-million-for-neurontin-marketing-fraud.html">reported</a>: <blockquote>Pfizer Inc. violated U.S. racketeering law in the marketing of its epilepsy drug Neurontin and should pay $142.1 million in damages, a jury decided. Kaiser Foundation Health Plan Inc. and Kaiser Foundation Hospitals claimed in a monthlong trial in federal court in Boston that Pfizer illegally promoted Neurontin for unapproved uses. The insurer said it was misled into believing migraines and bipolar disorder were among the conditions that could be treated effectively with Neurontin, approved in 1993 by the U.S. Food and Drug Administration for epilepsy. 'The jury found Pfizer engaged in a racketeering conspiracy over a 10-year period,' Tom Sobol, a lawyer for Kaiser, said after yesterday’s verdict. 'That bodes well for future cases.'</blockquote> Furthermore, this was a very special kind of verdict: <blockquote>The jury, which deliberated for two days, found that New York-based Pfizer violated the federal Racketeer Influenced and Corrupt Organizations Act, or RICO, and California’s Unfair Competition Law. Under RICO, the amount of actual damages found by the jury, $47.36 million, will be tripled.</blockquote> The RICO statute was meant to be used against organized crime.  A jury seems to have found that Pfizer is a "Racketeer Influenced and Corrupt Organization," that is, the moral equivalent of a crime syndicate. Summary So this week's settlement and conviction round-up shows the impunity that many health care organizations have exhibited thus far.  Some organizations have been charged again and again with unethical behavior.  Now one of the most frequent of the fliers has been convicted under the RICO law, certainly a new low. Yet none of the affected organizations in this post, and precious few we have discussed at other times, seem to have suffered any major consequences.  All have paid fines, some which seemed large at the time, but which have never been large enough to seriously threaten the organizations' financial well being.  None of the organizations seems to have lost business, or even much reputation.  Very few of the people within the organizations who approved, lead or implemented unethical behaviors have suffered any sort of negative consequences. There seems to be something very wrong here.  In the US, we have put much of our health care system in the hands of very large organizations, for-profit and not-for-profit, without holding these organizations and their leaders accountable for their actions.  The results have been increasingly rich leaders who often behave like a new aristocracy, and repeated bad behavior by the organizations they lead.  Our latest effort at health care "reform" has continued to rely on large private organizations, while so far not adding to their or their leaders' accountability.  In my humble opinion, if we really want to reform health care so as to improve quality, increase access, control costs, and support professionalism, we will have to make our new health care oligarchs accountable.

The Settlement and Conviction Round-Up: Friday Frequent Flier Edition

It's time for one of our periodic round-ups of legal settlements and convictions of health care organizations. This time, we report on ...

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