On August 12, 2022, the Department of Justice ("DOJ") filed its Amended Intervenor Complaint (the "Intervenor Complaint"), intervening in a qui tam action originally filed in 2014 by two nephrologists who referred patients to Fresenius Vascular Care d/b/a Azura Vascular Care ("Azura") clinics, Dr. John Pepe and Dr. Richard Sherman ("Relators"). The Relators filed their Fourth Amended Complaint ("Amended Complaint")1 against Fresenius Medical Care North America ("FMCNA"), Azura, and several other FMCNAaffiliated entities on August 7, 2020, alleging violations of the Federal False Claims Act ("FCA") and the Federal Anti-Kickback Statute ("AKS").2 The U.S. District Court for the Eastern District of New York unsealed the action on May 9, 2022. FMCNA is one of the two largest dialysis providers in the United States, operating over 2,500 dialysis units nationwide and treating over 200,000 dialysis patients annually. Azura operates more than 60 vascular care facilities across the country.
In the Intervenor Complaint, the DOJ alleges that Azura: (i) repeatedly performed and billed Medicare, Medicaid, and other government health care programs for medically unnecessary vascular access procedures, and (ii) falsified referrals to make it appear that patients' nephrologists referred the patients for these unnecessary procedures. On April 18, 2022, the Department of Justice ("DOJ") elected to intervene in the FCA claims but declined to intervene in the AKS claims. The AKS claims have since been voluntarily dismissed.
Medically Unnecessary Vascular Access Procedures The DOJ's principal allegations relate to the performance of medically unnecessary dialysis vascular access procedures provided to end-stage renal disease (ESRD) patients. In its Intervenor Complaint, DOJ alleges that the defendants engaged in a scheme to receive government payments for unnecessary surgical procedures and testing. ESRD patients generally require a surgically-created access point in a patient's arm or abdomen. The DOJ further asserts that under the Medicare Program rules, a patient's dialysis clinic is charged with monitoring the patient's fistula and overall vascular access, and is responsible for making referrals for diagnostic procedures to determine whether a fistula is functioning effectively or whether the patient has a condition or blockage impairing its functioning.
The DOJ alleges that during the period from 2012 through 2018, after a patient's treating nephrologist would refer the patient to an Azura clinics to treat clinically significant stenosis, Azura would routinely schedule follow-up appointments or so-called "clinically timed evaluations" ("CTEs") every two to four months without conferring with the patient's dialysis clinic or referring nephrologist.
The DOJ also claims that, at these appointments, Azura's staff would perform a brief visual exam and document a pre-textual indication of impaired vascular access, justifying the fistulagram, which was then often times followed by an angioplasty, for which Azura staff exaggerated the amount of vascular narrowing or stenosis. DOJ further alleges that Azura did not request any information concerning a patient's recent dialysis treatment from that patient's treating nephrologist or the dialysis clinic responsible for administering the patient's dialysis. The DOJ asserts that, in many cases, the records documenting the administration of dialysis at the patient's clinic in the days before a CTE demonstrated with quantifiable, objective measures that the patient was dialyzed without any issues. The DOJ estimates that these practices accounted for around seventy percent of all fistulagrams performed by Azura clinics.
According to the DOJ, following these medically unnecessary procedures, Azura clinics would document observing patients presenting with stenosis ranging from sixty to eighty percent blockage, and, based on this observation alone and against Kidney Disease Outcomes Quality Initiative (KDOQI) professional guidelines.3 According to the Intervenor Complaint, Azura would recommend further follow-up, thereby self-referring each patient indefinitely for follow up appointments and additional access center procedures. During those follow-up appointments, DOJ alleges that Azura providers performed improper angiograms on patients, along with invasive surgical procedures called angioplasties, without evidence that such procedures were medically necessary and without a referral from a nephrologist. Accordingly, the DOJ alleges that the defendants had no reasonable basis for performing these procedures, and that the defendants submitting, or causing to be submitted, fraudulent claims for governmental reimbursement.
In their Amended Complaint, Relators previously contended that Dr. William Rodino, an Azura interventionalist, admitted to performing "surveillance angiograms," stating that these procedures would identify issues missed by routine monitoring. However, Relators argued that under Medicare Program rules, "vascular studies are not covered as a separately billable service if used to monitor a patient's vascular access site," and that access site monitoring is included in ESRD Prospective Payment System (PPS) bundled payments.4 Thus, by billing for these services separately from the bundled payment, Relators alleged that Azura clinics billed Medicare and Medicaid for these medically unnecessary procedures in violation of FCA.
1 United States ex rel. Pepe and Sherman v. Fresenius Medical Holdings, Inc., et al., No. 14-CV-3505 (E.D. New York).
2 The FCA permits private citizens to bring qui tam actions on behalf of the federal government to recover funds it paid through government reimbursement that were based on false claims. See 31 U.S.C. § 3730. The relator may receive between fifteen and twenty five percent of the recovered amount if the federal government proceeds with the action. Since 1986, relator lawsuits have recovered billions of dollars on behalf of the federal government.
3 The complaint cites KDOQI Guidelines, noting that intervention on fistula should only be performed if the stenosis is "hemodynamically significant," including "both a narrowing greater than 50% and other supportive clinical symptoms, abnormal physical findings, and flow measurements."
4 The Relators cite the Medicare Benefit Policy Manual, Ch. 11, § 40.H.
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