Corporate Crime Reporter
Gambro Unit Pleads Guilty to Felony, Pays $350 Million in
Global
Settlement, Whistleblower’s Share Still Not Certain
18 Corporate Crime Reporter 47(1), December 6, 2004
A unit of Swedish medical supply giant Gambro Healthcare plead guilty to felony
charges and will pay $350 million in criminal and civil fines to resolve federal
health care fraud charges.
The company is the third largest owner and operator of renal dialysis clinics in the United States.
Gambro will pay a $25 million criminal fine and in excess of $310 million to
resolve civil liabilities stemming from alleged kickbacks paid to physicians,
false statements made to procure payment for unnecessary tests and services,
and payments made to Gambro Supply – a sham durable medical equipment
company set up by Gambro Healthcare.
A False Claims Act lawsuit was filed in 2001 by Gambro's former Chief Medical
Officer, Steven J. Bander.
As part of his duties, Dr. Bander oversaw medical and nursing services at Gambro's
outpatient dialysis centers across the U.S.
Under the provisions of the False Claims Act, Bander will receive a share of
the settlement – ranging anywhere from 15 to 25 percent.
Bander's share has yet to be determined.
Bander’s lawyer, John Gianoulakis, said that he was pleased that the parties
were “able to resolve this matter amicably.”
Gianoulakis is a partner in the firm of Kohn, Shands, Elbert Gianoulakis &
Giljum in St. Louis, Missouri.
This was Gianoulakis first False Claims Act case.
When asked why the amount the amount Bander will receive has yet to be determined,
Gianoulakis said that government attorneys “chose to defer the resolution
of the relator’s share until conclusion of the settlement with Gambro
and we look forward to working with the United States now to resolve that issue
in the same positive manner we have worked with them in the past.”
In most qui tam settlements, negotiations on the relator’s share are resolved
amicably, although brutal battles have been fought between relator attorneys
and Justice Department attorneys – with the SmithKline case being the
key case in point.
Bander is guaranteed a 15 percent share of the Gambro recovery.
“The Justice Department drives a hard bargain,” said John Phillips
of Phillips & Cohen in Washington, D.C. “Lawyers who haven’t
been through this before may not think to raise the issue before settlement.”
Judge’s look to what the relator’s contribution was to case –
how valuable was the relator’s participation, Phillips said.
In 2000, Gambro Healthcare and its subsidiary, Gambro Healthcare Laboratory
Services, agreed to pay $40 million to settle allegations of healthcare fraud.
Gambro and another subsidiary, Dialysis Holdings Laboratory Services, Inc. agreed
to pay more than $13.1 million to settle similar allegations.
Bander and the federal government charged that Gambro provided home dialysis
patients equipment and supplies through a "shell" durable medical
equipment company, Gambro Supply, in violation of Medicare regulations.
By billing in this manner, Gambro received a higher rate of reimbursement than
it would
have received if it had directly submitted the claims for payment. Emergency
home dialysis supplies were not provided as billed by Gambro, federal officials
alleged.
The government also alleged that Gambro engaged in a practice known as "hard
coding" of diagnostic codes on submitted claims – a practice that
resulted in the submission of false statements and bills being submitted for
ancillary medications and services which were not medically necessary –
bone density studies, nerve conduction studies, electrocardiograms, carnitor,
epogen, vitamin D and iron.
The government also charged the company hired and compensated physicians as
medical directors for their dialysis clinics based on the number and volume
of anticipated patient referrals to Gambro clinics.
Gambro Healthcare has corporate headquarters in Nashville, Tennessee and Denver,
Colorado.