Dialysis Fraud

Dialysis fraud refers to the various methods that for-profit dialysis clinics sometimes use to defraud the federal End Stage Renal Disease (ESRD) Program, including padding of bills, providing kickbacks to doctors for referrals, or receiving Medicare reimbursements for substandard care.

What is the ESRD Program?

To ensure that Americans with ESRD would get the treatment they need, Congress passed a law in 1972 extending Medicare coverage to anyone with end-stage renal disease, regardless of age, so long as they met the work requirements of Social Security (either for retirement or disability benefits). Retirement benefits require 10 years of work, whereas disability benefits require between 5 and 10 years of work, depending on the person’s age at the time of disability.

Work Requirements for Disability Benefits (by Age)

Source: Social Security Administration

Spouses and dependent children of individuals who meet the Social Security work requirements also qualify to have their dialysis treatments paid for by the ESRD Medicare program.

Approximately 92 percent of people with end-stage kidney disease qualify for Medicare under the ESRD Program. John Oliver, host of Last Week Tonight, has stated, “Essentially, we have universal health care in this country—for one organ in the body” (the kidney). By achieving near-universal coverage, the ESRD Program has saved countless lives. Paul Eggers, Ph.D., writes, “Perhaps no other Federal Government program can lay claim to have saved as many lives as the Medicare end stage renal disease (ESRD) program.”

To maintain the ESRD Program, the federal government spends approximately $33 billion per year. Unfortunately, wherever federal funds go, fraud often follows.

Types of ESRD Fraud

Whistleblower lawsuits involving ESRD fraud generally fall into three categories: bill padding, kickbacks, and substandard care.

Bill Padding

Bill padding involves any method that a company might use to fraudulently increase its Medicare billings, such as upcoding or unbundling of services.

Wasting Medications

A whistleblower sued DaVita—the largest dialysis provider—on allegations that DaVita designed its company policies to waste dialysis medication because it could bill Medicare for the medicine it threw away. The allegations covered two medications, Zemplar and Venofer, which are administered alongside dialysis treatment to prevent anemia. Zemplar, for example, comes in a 2-mcg vial, a 5-mcg vial, and a 10-mcg vial. All vials are single-use. The whistleblower alleged that for a 7-mcg injection of Zemplar, DaVita required its staff to use a 10-mcg single-use vial, rather than a 5-mcg and 2-mcg vial, because Medicare paid more for the 10-mcg vial, even if the unused 3-mcg had to be thrown in the trash. DaVita paid $450 million to settle the lawsuit.

Administering More Medication than Medically Necessary

A whistleblower sued DaVita on allegations that it had administered more Epogen (a hormone) to patients that was medically necessary. The company allegedly referred to Epogen as “liquid gold” because Medicare offered a high reimbursement rate for the drug. DaVita settled these allegations for $55 million. Because the government did not join the lawsuit, the whistleblower received approximately 30 percent of the recovery ($16.5 million).

Kickbacks

Under the False Claims Act and the Stark Law, it is unlawful for a healthcare provider to give kickbacks to doctors in exchange for patient referrals.

Kickbacks to Doctors in Exchange for Referrals

A whistleblower sued DaVita on allegations that the company had offered kickbacks to doctors in exchange for referring patients to DaVita. The complaint details a business strategy at DaVita of scouring the United States to locate potentially lucrative physician groups and individual doctors, who had large numbers of patients with kidney failure. DaVita also, allegedly, targeted physicians who were “young and in debt.” In exchange for an exclusive referral arrangement, DaVita offered substantial financial inducements to these doctors, the whistleblower alleged. DaVita paid $350 million to resolve these allegations.

Substandard Care

In exchange for providing Medicare funds, the federal government expects that Medicare patients will receive a certain baseline quality of care. Providers who offer care below this baseline can face liability under the False Claims Act.

Allowing Insufficient Time for Proper Treatment

On May 14, 2017, Last Week Tonight aired a segment on DaVita alleging that the company had put pressure on its nurses to rush patients out the door before they were done with their dialysis treatment, and gave nurses insufficient time between patients to disinfect the equipment. The segment sought to explain studies, such as one published by Yi Zhang et al., which found that patients who received dialysis from a private clinic experienced an approximately 20 percent higher risk of death than those who received dialysis from a non-profit hospital. Despite the Last Week Tonight segment, DaVita has yet to resolve any whistleblower suits regarding allegations of substandard care.

Kidney Transplants

Another relatively unlitigated aspect of ESRD fraud centers around the requirement that dialysis providers educate patients about their kidney transplant options. Whichever provider gives a patient their first dialysis treatment is required to fill out Medicare’s “Medical Evidence” form, which mandates that the patient be informed about transplant options, unless they are not eligible for a transplant or decline the information. The investigative team for Last Week Tonight has unearthed evidence that some dialysis clinics are not adequately educating, and even discouraging patients from seeking transplants.

This is problematic because dialysis is an imperfect way to remove toxins from the body, even if done three times a week: 64% of dialysis patients die within 5 years of starting treatment, whereas only 15% of patients who receive transplants die within 5 years.

Insurance Fraud

Recent litigation against DaVita and American Renal Associates has alleged that the companies convinced Medicare and Medicaid patients to drop their government coverage in favor of private insurance, because the companies could charge $4,000 per patient to private insurance, but could only get $300 or less from the government. DaVita allegedly paid a non-profit organization to partially subsidize patient’s premiums if they switched. Insurers, such as UnitedHealth, are upset by this practice and have sued in court.

What is End Stage Renal Disease?

End stage renal disease is commonly referred to as “kidney failure.” Doctors test for kidney failure by measuring the level of creatinine in a patient’s blood. Since creatinine is a waste product normally removed by the kidneys, an elevated creatinine level is an indicator of declining kidney function.

Kidney function is categorized into five “stages,” based on the patient’s “glomerular filtration rate” (GFR), which is a measure of how quickly the kidneys can remove waste and toxins from the body.

• Stage 1: normal kidney function
• Stage 2: kidney function as low as two-thirds of normal
• Stage 3A: kidney function as low as one-half of normal
• Stage 3B: kidney function as low as one-third of normal
• Stage 4: kidney function as low as one-sixth of normal
• Stage 5: kidney function from zero to one-sixth of normal

Patients with end stage renal disease (Stage 5) have kidneys that are so inefficient at filtering toxins from their blood that, to stay alive, they require frequent dialysis (or a kidney transplant).

Experienced Whistleblower Lawyers

Gibbs Law Group’ healthcare whistleblower lawyers have more than two decades of experience prosecuting fraud, and advocating for whistleblowers in a variety of actions.

Our attorneys have successfully litigated against some of the largest companies in the United States, and we have recovered more than a billion dollars on our clients’ behalf. We have fought some of the most complex cases brought under federal and state laws nationwide, and our attorneys have been recognized with numerous awards and honors for their accomplishments, including recognition among the Daily Journal’s “Top 30 Plaintiff Lawyers in California for 2016,” Top 100 Super Lawyers in Northern California, AV Preeminent-rated (among the highest class of attorneys for professional ethics and legal stills), and in the Best Lawyers Guide for four consecutive years.

We proudly hold memberships in Taxpayers Against Fraud, a public interest organization dedicated to combating fraud against the government and protecting public resources. Our firm supports the non-profit’s educational initiatives and efforts to advance public and government support for qui tam whistleblower cases.

Our whistleblower attorneys are sensitive to confidentiality concerns, all communications with our law firm are confidential and protected by the attorney client privilege.

To speak with a whistleblower lawyer and determine if legal action is appropriate for you, call (800) 254-9493 or fill out the form.