NASHVILLE (CN) – Renal Care Group, a $2.2 billion corporation, defrauded Medicare of millions of dollars a year for a decade by paying doctors kickbacks to use more expensive drugs, holding out on antibiotics, and overcharging for home dialysis equipment and supplies, a doctor and a former company executive say in a False Claims Act complaint Federal Court.
The suit, originally filed in St. Louis in 2005, accuses the Nashville-based dialysis provider of creating a subsidiary, RCG Supply, to act as a billing conduit to allow it to overcharge Medicare for home dialysis equipment and supplies.
Co-defendants RCG Supply is a wholly owned subsidiary of Renal Care Group, not an independent medical equipment supply company, according to plaintiffs Julie Williams and Dr. John Martinez. Williams was controller and administrator for the companies’ East Texas market, and Martinez began as an independent contractor and then worked as RCG’s medical director. Both left RCG late in 2002.
Federal law prohibits dialysis facilities from also supplying home dialysis equipment and supplies to Medicare patients, but RCG Supply provided home patients with supplies directly through its facilities, not a third-party supplier, according to the complaint. Martinez and Williams say the company did not, as required, maintain and repair equipment, have an inventory, have a contract with nearby dialysis centers to provide patients with assistance, or pass on the savings it made by buying equipment in bulk.
“RCG’s corporate office routinely analyzed the profitability of prescribing certain drugs,” and in its quest for profit routinely left needed and required antibiotics out of the homes of patients susceptible to peritonitis, according to the complaint. The former executives say infected patients had to go to a dialysis center for treatment, allowing Renal Care to collect additional reimbursements from Medicare. They say that required emergency supply kits were not documented correctly and in some cases not delivered at all.
Renal Care also took undisclosed rebates and bribes from drug companies while charging Medicare full prices, the complaint states. Amgen allegedly gave Renal Care rebates, free clinical and sales staff and entertained doctors so Renal Care would buy its EPO, a hormone that controls red blood cell production.
Abbot Laboratories got in on the action too, the suit claims, by giving Renal Care rebates to push and buy the drug Zemplar, a vitamin D analog that costs more than effective, competing drugs. “RCG waged an aggressive campaign to encourage physicians to prescribe Zemplar,” according to the complaint.
With profit in mind, Renal Care recruited doctors to act as medical directors of its dialysis centers in 1998, the complaint states, and paid them according to patient volume, not duties, time or expertise. Medical directors allegedly ended up with paychecks worth far more than fair market value and were more eager to keep patients at their clinics.
The plaintiffs, on their own behalf and for the United States, seek treble damages, 10,000 per civil violation, and up to 25 percent of the settlement or recovery, under the False Claims Act. They are represented by Maurice Graham of Gray, Ritter & Graham in St. Louis.