In what could be the largest healthcare fraud settlement to date, international kidney dialysis giant Fresenius Medical Care said it will pay the U.S. government $485 million to resolve civil and criminal Medicare fraud allegations.
Fresenius, the world's largest provider of kidney dialysis services, and its Lexington, Mass.-based subsidiary, Fresenius Medical Care North America, announced a preliminary agreement with the U.S. attorney's office in Boston.
Fresenius North America Senior Vice President John Markus explained that the charges related to dialysis treatments and services administered by National Medical Care, the company it bought from W.R. Grace & Co. in 1996 for $4 billion. The government will deduct from the settlement amount the $70 million it owes Fresenius for nutrition therapy services provided.
The German dialysis firm treats more than 78,000 end-stage renal disease patients in more than 1,000 dialysis centers worldwide. In the U.S., Fresenius treats about 60,000 patients at 800 clinics, controlling 28% of the U.S. dialysis market.
"We are very pleased to have this behind us," Markus said. "This was something Fresenius was aware of when it acquired National Medical. We anticipated this day."
Markus said the company took the unusual step of announcing the initial agreement even before a settlement was signed to protect shareholders and forewarn them of the $590 million charge the company is taking against third-quarter earnings.
"We believe we were required by (the Securities and Exchange Commission) rules to announce this to our shareholders," Markus said.
He said whistleblowers are involved in the case and denied that Fresenius would have to divest itself of any of its operations.
In May Fresenius paid $16.5 million to resolve whistleblower allegations that a National Medical subsidiary paid kickbacks to physicians to order unnecessary tests. In June two Fresenius vice presidents pleaded guilty to criminal Medicare fraud conspiracy charges, and three remain indicted.