Columbia/HCA Healthcare Corp. may have glimpsed its legal future last week when four private health insurance companies sued Fresenius Medical Care North America for fraud.
The 96-page complaint, filed in U.S. District Court in New York, comes less than a month after dialysis provider Fresenius agreed to pay $486 million to settle civil and criminal charges that it defrauded Medicare (Jan. 24, p. 6).
As part of the settlement, the Lexington, Mass.-based American operation of the German company paid $101 million in criminal fines.
The lawsuit is the latest example of private health insurers' filing copycat litigation after a healthcare provider settles fraud allegations with Medicare and Medicaid. Companies that have faced such suits include SmithKline Beecham and National Medical Enterprises.
Columbia, the nation's largest hospital chain, faces the same threat. As first disclosed by MODERN HEALTHCARE, more than 40 health insurers represented by three law firms have prepared civil fraud recovery actions against the Nashville-based company. The insurers are negotiating with Columbia even as the U.S. Justice Department is working on a civil fraud settlement covering Medicare and Medicaid (Jan. 3, p. 16).
The federal Columbia settlement, parts of which are expected to be resolved soon, would cover most or all of the allegations contained in 26 civil fraud whistleblower lawsuits against the company. Those lawsuits and the possible settlement are separate from an ongoing criminal fraud investigation.
As for Fresenius, the four insurers suing are Cigna Employee Benefits Services and Connecticut General Life Insurance Co., both of Bloomfield, Conn.; and Equitable Life Assurance Society of the United States and Guardian Life Insurance Company of America, both of New York.
Aetna U.S. Healthcare and Aetna Life Insurance Co. have a suit pending against Fresenius. Their suit was filed in December 1997-before the government filed its case-by Kornstein, Veisz and Wexler of New York, the same law firm that represents the insurers in the new lawsuit.
Several of the insurers also are part of the civil recovery efforts under way against Columbia, sources said.
In both suits, the insurers allege that three Fresenius subsidiaries:
* Conspired to pay kickbacks for laboratory referrals.
* Used medical director contracts to disguise kickbacks as fees for services.
* Submitted claims for medically unnecessary tests and tubal feedings.
The insurers allege the fraud occurred from 1987 to 1999, costing unspecified millions of dollars. They seek triple damages.
The three Fresenius subsidiaries were part of National Medical Care, which Fresenius acquired from W.R. Grace & Co. for $4 billion. They are NMC's Medical Products Division, NMC Homecare and NMC LifeChem.