Dialysis Providers Settle Civil Fraud Claims for More Than $9.5 Million

Breon Peace, United States Attorney for the Eastern District of New York, announced agreements with several entities that provide dialysis treatment and services to patients suffering from chronic kidney failure, also known as end-stage renal disease or ESRD.  The defendants have agreed to pay a total of more than $9.5 million to settle civil fraud allegations that they caused double-billing to the Medicaid Program for certain medications.  Under the terms of the agreements, these providers, including DaVita Healthcare Partners, Inc., Bay Ridge Sunset Park Dialysis Center, Inc., Midwood Chayim Aruchim Dialysis Associates, Inc., New York Artificial Kidney Center, Inc., The Rogosin Institute, for itself  and as successor-in-interest to Nephrology Foundation of Brooklyn, Terence Cardinal Cooke Health Care Center, New York Renal Associates, Inc., and Dialysis Clinic, Inc., have paid $3,967,083.38 to the United States under the federal False Claims Act and $5,629,151.20 to New York State under New York State’s False Claims Act.  The agreements were approved by United States District Judge Allyne R. Ross.

“No patients, especially those suffering from chronic diseases, should ever be used by health care providers to defraud Medicaid,” stated United States Attorney Peace.  “This settlement sends a strong message that our office will vigorously prosecute anyone whose practices jeopardize Medicaid for their own enrichment.”

Mr. Peace thanked the Medicaid Fraud Control Unit of the Office of the New York Sate Attorney General for partnering in the Government’s investigation and resolution of this important case. 

The Government’s investigation revealed that, from 2000 through 2010[1], the dialysis clinics and management companies improperly caused claims to be made to Medicaid by retail pharmacies for certain injectable drugs that were administered during the course of dialysis treatment for ESRD. The injectable drugs had already been paid for by Medicaid as part of the composite dialysis payments received by the dialysis clinics and management companies for dialysis treatments. 

The civil settlement resolved allegations brought under the qui tam or whistleblower provisions of the federal and state False Claims Acts against these entities.  Under the qui tam provisions of these Acts, a private party can file an action on behalf of the United States and receive a portion of the settlement if the government takes over the case and reaches a monetary agreement with the defendant.  The qui tam case is captioned United States and the State of New York ex rel. Island Rehabilitative Services, Corp. v. South Brooklyn Nephrology Center, Inc. et al, Civil Action No. 09-CV-1549 (E.D.N.Y).

The claims resolved by the settlement are allegations only and there has been no determination of liability.

The government’s case was handled by Assistant United States Attorneys Anjna Kapoor and John Vagelatos.