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Gambro Healthcare - Dialysis Fraud Pays Big Bucks

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Message Evelyn Pringle
Medicare payments for dialysis, cost the US government $5 billion a year. The global market for chronic dialysis services is worth approximately $43 billion and the US market is the largest in the world in terms of value.

Worldwide, by the end of 2005, the number of dialysis patients reached 1.5 million. Of that number, approximately 23% patients were treated in the US, 20 percent in Europe, 17% in Japan, and 40% in the rest of the world.

Having said all that, it will probably come as no surprise that most of the major renal care facilities in the US have come under investigation for fraud in recent years, to include Fresenius Medical Care America, DaVita Inc, Renal Care Group, Quest Diagnostics, and Bone Care International.

The 6th largest medical fraud case in US history was settled in December 2004 against Gambro Healthcare, for $325 million. At the time, Gambro was the third largest operator of renal-dialysis clinics in the US. The settlement period covered fraud that occurred from January 1, 1991, through September 30, 2004.

Gambro Healthcare is owned by a holding company, Gambro Inc, a subsidiary of Gambro AB, headquartered in Stockholm, Sweden, which produces dialysis products, operates dialysis clinics and markets blood bank technology products.

In fiscal 2004, the company had revenue of $3.6 billion. Gambro had revenue of $1.4 billion in the first nine months of 2005, with the latter significantly lower than 2004 due to the company selling off its US operations to DaVita in October 2005.

In December 2004, Gambro entered into an agreement to sell it's US renal business to DeVita Inc for $3.05 billion and the FTC approved the deal in October 2005. Since the sale of its US operations, Gambro has around 11,300 employees in 40 countries.

The federal fraud investigation began in 2001, after Dr Steven Bander filed a federal whistle-blower lawsuit against the company in St. Louis, alleging fraudulent billing practices. Dr Bander is a kidney specialist and served as Gambro's chief medical officer from 1995 to 2000, according to the lawsuit complaint.

In the end, the investigation involved the FBI, the Justice Department's Civil Division and the Health and Human Services' Office of Inspector General.

On December 2, 2004, the Department of Justice announced that Gambro would pay more than $350 million in criminal fines and civil penalties to settle allegations of fraud against government healthcare programs,

Gambro paid in excess of $310 million to resolve civil liabilities stemming from kickbacks paid to physicians, false statements made to procure payment for unnecessary tests and services, and payments made to the sham equipment company Gambro Supply.

The settlement also required Gambro to pay $15 million to resolve liability with the individual state Medicaid programs to include Arizona, Arkansas, Alabama, California, Colorado, Connecticut, Kansas, Kentucky, Michigan, Missouri, Nevada, Oklahoma, Texas, Virginia, Florida, Georgia, Louisiana, Mississippi, North Carolina, Pennsylvania, Tennessee, Wisconsin, Washington, Illinois, Maryland, Massachusetts, New Jersey, New Mexico, New York, Ohio, Oregon, Indiana, Utah, Iowa, Minnesota, Nebraska, New Hampshire, Rhode Island, South Carolina and West Virginia.

Upon receiving his state's portion of the settlement last fall, Connecticut Attorney General, Richard Blumenthal, said in a September 27, 2005 press release, "Gambro's conduct was reprehensible. Their scams and schemes - including kickbacks, unnecessary tests and billing fraud - stole precious funds intended to care for some of society's neediest patients."

According to the Department of Justice, the settlement resolved allegations that Gambro Healthcare:

(1) Provided home dialysis patients equipment and supplies through a "shell" durable medical equipment company, Gambro Supply, in violation of Medicare regulations. By billing in this manner, Gambro received a higher rate of reimbursement than it would have received if it had directly submitted the claims for payment. Also, emergency home dialysis supplies were not provided as billed by Gambro;

(2) Engaged in "hard coding" of diagnostic codes on submitted claims. This practice resulted in the submission of false statements and bills being submitted for ancillary medications and services which were not medically necessary (bone density studies, nerve conduction studies, electrocardiograms, carnitor, epogen, vitamin D and iron); and

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Evelyn Pringle is a columnist for OpEd News and investigative journalist focused on exposing corruption in government and corporate America.
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