A federal appeals court on Friday overturned an $82.6 million judgment against three companies, saying businesses did not know they were violating Medicare's rules concerning the submission of bills for payment.
The U.S. 6th Circuit Court of Appeals also dismissed the main civil charges brought in a whistleblower lawsuit against Renal Care Group, Renal Care Group Supply Co. and Fresenius Medical Care Holdings Inc. The three-judge panel sent five other allegations back to U.S. District Judge William J. Haynes Jr. in Nashville for hearings.
Judge R. Guy Cook concluded that the companies did not act with "reckless disregard of legal mandates" when it came to their submissions to the Medicare program and cannot be held liable for filing false claims under federal whistleblower laws.
Haynes ruled in 2011 that the companies improperly billed Medicare from 1999 to 2005. The $82.6 million included $43.7 million in civil penalties. Fresenius acquired Renal Care Group in 2006.
The companies, with locations throughout Missouri, treated end-stage renal disease, when the kidneys are no longer able to function at a level needed for daily life. Congress expanded Medicare in 1972 to cover patients suffering from end-stage renal disease, regardless of age.
Renal Care Group spun off Renal Care Group Supply Co., as a new entity and both companies billed Medicare for services. Haynes held that the companies were in effect double dipping -- something not permitted under Medicare regulations.
Prosecutors had argued that the defendants improperly billed Medicare by using a sham company that was not independent as mandated by regulations. Prosecutors quoted one whistleblower, a regional manager, as saying, "I do not wish to go to jail."
The appeals court rejected Haynes' logic, finding the companies disclosed the split to the government and even sought legal guidance on its legality.
"Why a business ought to be punished solely for seeking to maximize profits is beyond us," Cole wrote in an opinion joined by Judge Deborah Cook.
Judge Gerald E. Rosen, in a concurring opinion, criticized the complexity of the federal government's rules concerning whether companies such as Renal Care Group Supply Co. should be eligible for Medicare payments. Rosen wrote that the government offered "no signposts" for resolving the questions over the spinoff companies eligibility.
"Faced with this unclear and ambiguous statutory scheme, RCG sought the advice of counsel and federal officials as to whether its plan for (Medicare) reimbursement was lawful, and it made no secret of the corporate arrangement it had chosen to pursue ... payments," Rosen wrote.
The case was filed in St. Louis in 2005 and was subsequently transferred to Nashville.comments powered by Disqus