Gambro to pay $350M to settle fraud case

ST. LOUIS -- The nation's third-largest operator of renal-dialysis clinics has agreed to pay the federal government $350 million to settle civil and criminal charges that it defrauded Medicare, a U.S. attorney said Thursday.

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Authorities called the settlement by Gambro Healthcare U.S. among the largest in the Justice Department's history, resolving an investigation that followed a 2001 lawsuit by whistleblower Dr. Steven Bander, a former Gambro medical officer.

U.S. Attorney James Martin said the fraud included Gambro paying kickbacks to physicians for referrals to the company's clinics, Gambro's setting up a sham company to feed inflated billings to Medicare, and falsifying billing statements to patients to justify compensation for unnecessary tests and services.

The settlement includes a $310.5 million civil penalty, as well as $15 million to resolve potential liabilities with 44 states. A Gambro division, Gambro Supply Co., pleaded guilty Thursday to federal fraud-related charges, agreed to pay a $25 million fine and be permanently barred from the Medicare program.

That Medicare ban does not apply to Gambro Healthcare, Martin said.

Martin said he could not specify the amount of money bilked from Medicare -- the second time in four years Gambro has been accused of fraud. In 2000, the company and two subsidiaries -- Gambro Healthcare Laboratory Services and Dialysis Holdings Laboratory Services Inc. -- paid more than $53 million to settle similar allegations.

"Health-care fraud, as this case shows, costs this country hundreds of millions of dollars," Martin said during a news conference also attended by officials with the FBI and the Department of Health and Human Services.

In a statement, Gambro -- a unit of Sweden-based Gambro AB -- said that during the government-scrutinized period, dating to 1991, "the quality of care that Gambro provides to its patients was never in question."

"We cooperated fully with the government to settle this matter and put behind us issues that arose during a period of rapid and complex industry consolidation in the 1990s," Larry Buckelew, Gambro Healthcare's president and chief executive, said in a statement.

Buckelew said Gambro management "has invested significant resources in bolstering our compliance efforts," and in consultation with physicians, the company's caregivers and other workers "we have proudly achieved a significant improvement in patient outcomes over the past five years."

Gambro, with headquarters in Denver and Nashville, Tenn., provides about 6.5 million dialysis treatments a year to more than 40,000 chronic kidney disease patients in 550 clinics nationwide. Worldwide, Gambro treats roughly 55,000 patients at more than 700 clinics.

Martin said Gambro should be able to sufficiently absorb the settlement tab he called "significant suffering, I believe."

"It's not our intent to put them out of business," he said. "This company is a multibillion-dollar company, and I'm sure they will survive."

Regardless, Martin said, "I think patients will get fine health care if they go to these (Gambro) clinics."

Martin refused to say whether individual doctors could face prosecution as part of the alleged scheme.

For his whistleblower's role, Martin said, Bander will be entitled to "a very significant payout of money being paid by Gambro." Martin said he could not be more specific.

"That is a figure still being negotiated," he said. "Will it be in the millions of dollars? Yes, it will be."

Within weeks, Missouri and the other 43 states that will share the $15 million payout will learn their portion, Missouri Attorney General Jay Nixon said.

"Missouri's Medicaid program was put in place as a safety net for those individuals who find themselves without medical care," Nixon said. "For a company to steal from that program for their own financial gain is tantamount to stealing from the church poor box."

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On the Net:

Gambro Healthcare, http://www.gambrohealthcare.com

U.S. Attorney's Office, Missouri's Eastern District, http://www.usdoj.gov/usao/moe