The federal government's three-year investigation into the Medicare billing practices of laboratories has spilled over into the world of providers.
Vivra, the nation's second-largest dialysis services provider, said the U.S. Justice Department has asked the company to turn over records related to its lab practices.
The government's interest in San Mateo, Calif.-based Vivra appears to have been piqued by the company's connections to Damon Clinical Laboratories, whose new owner, Corning, recently agreed to pay $119 million to settle fraudulent billing charges against Damon (Oct. 14, 1996, p. 8).
The U.S. attorney's office in Massachusetts, which also investigated Damon, served Vivra with a grand jury subpoena. The company said the feds have requested documents dating from Jan. 1, 1987, through July 1, 1996, that pertain to all its dialysis centers and its agreements with Damon.
Vivra was formed in 1989 when Community Psychiatric Centers spun off its home-care unit and its dialysis division, called Community Dialysis Centers, into a new company.
In June 1992, Community Dialysis formed a 50-50 joint venture with Damon to operate a lab. Previously, Community Dialysis contracted with Damon for lab services.
The partnership ended in 1995 when Corning acquired a 60% interest in the lab, and Community Dialysis, recently renamed Vivra Renal Care, retained a 40% stake.
Vivra said that from Dec. 1, 1990, to May 31, 1996, its total lab receipts from Damon were $8.5 million, representing less than 1% of the company's $1.2 billion in total revenues.
Vivra predicted it would take at least a month to collect and submit the documents and that the issue would take longer than three months to resolve.