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Fresenius National Medical Care Holdings, Inc. pays the government $16.5 million to settle alleged violations of the False Claims Act

On May 17, 1999, Fresenius National Medical Care Holdings, Inc., N.M.C. Diagnostic Services, Inc., Biotrax International, Inc., and National Medical Care, Inc. agreed to pay the government $16.5 million to settle alleged violations of the False Claims Act brought by several qui tam relators.

The whistleblowers, Franklin W. West and Robert T. Kane, filed a complaint in the Eastern District of Pennsylvania against the defendants on May 26, 1995, in which the government intervened. The government did not file a complaint of its own. The settlement agreement resolves only civil liabilities, and does not address any criminal liabilities on the part of the defendants, their company officers, or their current or former directors. As a result of the settlement agreement, Mr. West, Mr. Kane, and their counsel were awarded nearly $3.3 million.

The defendants, who engage in the multi-billion dollar business of providing dialysis services for severely debilitated patients with end stage renal disease (ESRD), also provide testing services for patients suffering from ESRD. The complaint alleges that the defendants aggressively marketed nationwide a battery of diagnostic tests, and “sold” these tests to the referring physicians, who then billed Medicare at a higher rate than what was authorized for such tests. As a result of the defendants’ marketing strategies, physicians were induced to order many unnecessary tests, which had no medical justification and offered no benefit to the patients. The relators learned of these improper billing procedures and informed government investigators of the defendants’ wrongdoings. The relators assisted in the government’s investigation for the four year period between the filing of the complaint, and the signing of the settlement agreement. The relators are represented by Marc S. Raspanti, Esquire, and David M. Laigaie, Esquire.

For more information about the False Claims Act and whistleblower cases, we invite you to visit the False Claims Act Resource Center at www.falseclaimsact.com.

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