Dialysis giant under multi-million HSE contract topped US Government criminal fraud fine league

national | rights, freedoms and repression | news report Monday May 19, 2008 11:49 by Marie O'Connor - Health Services Action Group

Calls for whistleblower legislation multiply as outrage mounts among

This morning Raidió na Gaeltachta reported that Fresenius, a dialysis
giant awarded multi-million contracts by the HSE, had been fined
almost half a billion dollars by the US Justice Department in 2000. 'This case broke all
US Justice Dept records for both criminal and civil fines', said Marie O'Connor.

Dialysis giant under multi-million euro HSE contract topped US Gov
criminal fraud fine league

Calls for whistleblower legislation multiply as outrage mounts among
health lobby groups

Health campaigners say they are outraged at the awarding of
multi-million state contracts to health care corporations who have
topped the league in criminal fraud fines in the United States.
'Fresenius's staggering fraud payments to the US Government puts
Quest's in the shade, ' said Marie O'Connor.

This morning Raidió na Gaeltachta reported that Fresenius, a dialysis
giant awarded multi-million contracts by the HSE, had been fined
almost half a billion dollars by the US Justice Department in 2000.
The German company controls around 35 per cent of the dialysis
'market' in the United States.

Last week's revelation that another health care corporation who made
massive fraud payments to the US Government, Quest, had been awarded
the national contract for cervical cancer testing in Ireland led to
heated exchanges in the Dail.

Health analyst Marie O'Connor, who broke the story on RnaG's flagship
morning programme 'Adhmhaidin', said the Fresenius fraud fines were
the largest in the history of the United States: 'This case broke all
US Justice Dept records for both criminal and civil fines'.

The Government is putting patients at risk, she warned, by trading in
health services. 'The private for profit health care industry is
widely acknowledged to be one of the most corrupt in the United
States. Medicare fraud stood at a staggering $23billion in 1996.'

'The Fresenius dialysis contracts raise the issue of what constitutes
due diligence' said Dr John Barton, consultant physician and Health
Services Action Group Vice-Chair. The quality of patient care is at
stake, he underlined, as well as taxpayers' money. 'Can HSE now
explain how having a history of fraud payments in the United States is
compatible with due diligence in awarding multi-million health care
contracts?

Joe Higgins of the Campaign for a Real Public Health Service said this
case, like others, highlighted the potential for corruption inherent
in the for profit sickness industry. 'Fresenius was charged with
making false claims for laboratory tests and conspiring to pay illegal
bribes. Quest was similarly charged with insurance fraud.'

The groups called for the urgent introduction of whistleblower
legislation along the lines of the US False Claims Act.

The sweeping investigation into Fresenius involved law enforcement
agencies such as the FBI, the Department of Justice and the Department
of Health and Human Services.

Three divisions of the company pleaded guilty to criminal charges. Two
senior executives pleaded guilty to felony crimes and three others
were also indicted on criminal charges.

Last week, Fresenius was granted planning permission to build a
dialysis unit in a Limerick retail park, after being refused
permission to develop a site in Kilkenny. The company was awarded
multi-million euro contracts by the HSE to provide kidney dialysis
services in the mid-west and south-east in 2006. HSE plans for the
Fresenius service involve Limerick Regional Hospital.

The Fresenius scam involved fraudulent and fictitious blood testing
claims; kickbacks to dialysis facilities in return for blood testing
contracts and fraudulent claims against State health insurers. The
world's largest provider of kidney dialysis products and services was
fined a total of $486m by the US Justice Department.

Criminal charges were filed against three divisions of the company:
each agreed to plead guilty to separate criminal charges.

LifeChem agreed to plead guilty to conspiring to submit false claims
for cetain laboratory tests; another division, Medical Products agreed
to plead guilty to conspiring to offer and pay kickbacks to induce
dialysis units to order blood tests from LifeChem; while a third
subsidiary Homecare agreed to plead guilty to obstructing government
agencies administering state insurance schemes such as Medicare.

All three Fresenius companies divisions were permanently excluded
from future participation in Medicare programmes.

Announcing the company's criminal pleas and civil penalties in Jan
2000 on behalf of the US Justice Department, General Eric H Holder
spoke about a wide-ranging conspiracy to defraud Medicare and other
government health care programmes. The Deputy Attorney General
underlined the fact that Fresenius had agreed to pay the largest
criminal fine ever to be levied in US, at $101m. Its civil settlement
of $385m was also the biggest in American history.

Last week, in Kilkenny, the company was refused planning permission to
develop a commercial building in John St. Fresenius sought permission
to convert this building into a dialysis centre, despite the fact
that, contrary to British standards for 'satellite units', the
building offered no natural light for patients undergoing treatment.

Fresenius had previously been refused planning permission for another
site near Purcellsinch, Co Kilenny. Mark Murphy, Irish Kidney
Association spokesperson, was quoted as saying he was not impressed
with the planned facility in John St.

HSE contracted Fresenius in 2006 to provide dialysis services on an
interim basis in Kilcreene Hospital Co Kilkenny.

The Fresenius fraud fines were the largest in the history of the
United States. As much as $385m was recovered under the False Claims
Act. This legislation empowers government to seek damages and impose
fines against health care providers who knowingly submit false or
fraudulent claims to Medicare and other government insurers.

The Act has been very successful in combating fraud in the US. In
industry acknowledged to be one of the most corrupt in the US, the Act
enables whistleblowers to file suits on behalf of the US Government
and to claim a share of the pay-out if the action succeeds.

From 1996 to 2000, $2.9 billion was recovered in false claims against
Medicare with the assistance of whistleblowers, Medicare is a health
insurance scheme for elderly and disabled Americans.

Medicare fraud stood at a staggering $23billion in 1996, when the
False Claims Act was strengthened.