A federal appeals court has reversed a judgment against the dialysis provider Renal Care Group, now a part of Fresenius Medical Care, which was accused of improperly billing Medicare for home dialysis supplies and equipment between 1999 and 2005. The original ruling, made in a U.S. District Court in Tennessee in May 2011, said the dialysis provider had "recklessly disregarded federal law" and awarded the United States $82,642,592 plus costs.
The appeal court wrote in its judgment that the case against the dialysis provider "boils down to this: dialysis facilities may not seek Method II reimbursements, and [Renal Care Group Supply Company] was an alter ego of [Renal Care Group], a dialysis facility; ergo, RCGSC improperly sought Method II reimbursements." In its case, the court wrote, "the United States focuses, somewhat obsessively, on evidence demonstrating that RCG sought Method II reimbursements for the sole purpose of increasing its profit margins. Why a business ought to be punished solely for seeking to maximize profits escapes us."
The appeals court ruled that the dialysis provider did not act in reckless disregard and that "there is no evidence in the record that they acted with actual knowledge or in deliberate ignorance of the truth."
Original complaint against Renal Care Group
The government's complaint alleged that between January 1999 and December 2005, Renal Care Group Supply Company submitted claims to the Medicare program for home dialysis supplies provided to ESRD patients for reimbursement of the supplies and equipment. All of these claims, as well as related claims for support services rendered by Renal Care Group dialysis clinics were alleged to be false because the dialysis provider was prohibited from billing Medicare for these home dialysis patients. The Medicare program pays companies that provide dialysis supplies to ESRD patients only if the companies that provide the supplies are truly independent from dialysis facilities and the ESRD patient chooses to receive supplies from the independent supply company.
In its complaint, the government said Renal Care Group set up a sham billing company, Renal Care Group Supply Company, that was not independent from Renal Care Group. The complaint also alleged that Renal Care Group interfered with ESRD patients' choice of supply options, requiring patients to "move" to RCGSC.