March 21, 2001 - -- United States Attorney Donald K. Stern today announced that Transitional Hospitals Corporation (THC) has agreed to pay $1,561,267 to the United States as part of its bankruptcy reorganization to resolve THC's civil liabilities in connection with the Government's lawsuit pending in the United States District Court in Boston.

The US Attorney's Office in Boston is alleging that THC conspired with others to defraud the United States and to knowingly submit false and fraudulent claims to Medicare in connection with medically unnecessary laboratory tests and medically unnecessary blood draws performed on dialysis patients.

THC was previously known as Community Psychiatric Centers, Inc. (CPC), which had a division called Community Dialysis Centers that provided dialysis services. CPC had a joint venture with Damon Clinical Laboratories, which performed blood analyses for dialysis patients. In 1989, CPC spun off its dialysis clinic business to Vivra Incorporated, which continued to participate in the laboratory joint venture with Damon.

In 1996, Damon Clinical Laboratories paid $119 million to resolve the criminal and civil liabilities associated with its dialysis lab business and Damon was excluded from further participation in the Medicare program.

The government alleges that CPC, and later Vivra, participated in the joint venture laboratory with Damon for the illegal purpose of sharing the profits gained from Medicare reimbursement for unnecessary laboratory tests run on dialysis patients.

In 1998, Vivra's dialysis business was purchased by Gambro. The litigation by the government continues against Vivra.

Vivra's CEO before it was purchased by Gambro was Kent Thiry, who now heads DaVita, the third largest dialysis provider with more than 486 dialysis facilities and 41,000 patients. DaVita was previously known as Total Renal Care. Thiry became the CEO of Total Renal Care on October 18, 1999. Total Renal Care was renamed DaVita in October 2000.

DaVita is currently cooperating with the United States Attorney's Office for the Eastern District of Pennsylvania as it looks into DaVita's billing and other operating procedures and DaVita's financial relationships with physicians. Here is a press release from the DaVita web site on this current investigation. Here is an on-going summary page on the investigation from RenalWEB.

The US Attorney in Boston, Donald K. Stern, has been very successful in in pursuing healthcare fraud cases. Between 1994 and 2000, Stern's office took in $862.5 million in fines, penalties, and property seizures. The majority of this amount was the $486 million settlement reached in January 2000 with National Medical Care, which is currently owned by Fresenius Medicare Care AG, the largest dialysis provider in the world.




[This message has been edited by Gary Peterson (edited 03-21-2001).]

This paragraph deleted due to RenalWEB policy.

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Just what dialysis patients need: To have blood drawn every week when we can't manufacture the red blood cells in the first place! Wonder how much extra EPO we need just to supply them with bloodwork?




[This message has been edited by Gary Peterson (edited 03-23-2001).]