U.S. District Court in Tennessee Awards Government in Excess of $82 Million in FCA Suit Regarding Medicare Fraud
On May 26, 2011, Judge William J. Haynes, Jr. awarded the United States $82,642,592.00 in damages after granting summary judgment in favor of the government on its False Claims Act (“FCA”) claim against Fresenius Medical Care Holdings, Inc. The award was based on treble damages under the FCA of $38,873,592 and $43,769,000 in civil penalties.
The government’s claim stemmed from the alter ego relationship between two of Fresenius’s predecessors in interest, the Renal Care Group (“RCG”) and RCG Supply Company (“RCGSC”). The Court found that RCG in fact created, controlled and operated RCGSC, which rendered the latter ineligible to receive higher payments from Medicare for the sale of certain dialysis supplies under an express Medicare statute. Despite this statutory ineligibility, RCG and RCGSC submitted claims for the higher payments, and received them, from 1999 through 2004. In discovery, RCG and RCGSC admitted that, as a result of these higher payments, they received $12,957,864 more than they should have under the Medicare statute. That difference formed the basis of the Court’s treble damage award.
RCG and RCGSC also admitted that, during the five-year period for which they submitted inflated claims to Medicare, such claims were submitted on behalf of at least 3,979 individual patients. The FCA provides for statutory damages of up to $11,000 for each false claim submitted to the government. Judge Haynes held that, since Medicare reimburses providers for services provided to individual, eligible beneficiaries, the Defendants submitted a “false claim” for purposes of statutory damages under the FCA for each of the 3,979 patients for whom reimbursement was sought, even if multiple patients were aggregated in any given request for reimbursement from the Defendants to Medicare.