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WASHINGTON, D.C. - GAMBRO Healthcare, Inc. (GAMBRO) and its subsidiary, GAMBRO Healthcare Laboratory Services, Inc. (GHLSI) have agreed to pay $40 million to settle allegations of healthcare fraud, the Justice Department announced today. GAMBRO and another subsidiary, Dialysis Holdings Laboratory Services, Inc. (DHLSI), have also agreed to pay more than $13.1 million to settle similar allegations.

The settlements with the GAMBRO companies resolve allegations that the firms submitted false claims to Medicare, Medicaid and TRICARE - the Defense Department's health care program -- for laboratory services. The allegations are that the services were provided by GHLSI's Ft. Lauderdale, Florida laboratory and DHLSI's Deland, Florida laboratory (formerly known as Vivra Laboratory) to End Stage Renal Disease (ESRD) patients. ESRD occurs when chronic renal failure progresses to the point at which the kidneys are permanently functioning at less than 10% of their capacity.

In early 1997, as part of Operation Restore Trust, the Office of the Inspector General of the Department of Health and Human Services commenced an investigation of the billing practices of the GAMBRO renal dialysis laboratory located in Ft. Lauderdale and the Vivra Laboratory in Deland. The government's investigation discovered that GAMBRO's Ft. Lauderdale lab billed the federal healthcare programs for medically unnecessary lab tests provided to ESRD patients, double billed for lab tests included in Medicare's ESRD composite rate payments to dialysis clinics and violated the 50-50 rule which prohibits ESRD laboratories from billing Medicare Part B for lab test panels comprised of more than 50% composite rate tests.

The government's investigation similarly uncovered that the Deland lab billed Medicare, Medicaid and TRICARE for medically unnecessary tests provided to ESRD patients and double billed for tests included in Medicare's ESRD composite rate payments to dialysis clinics. The Deland lab was closed in 1998.

"This settlement again demonstrates the United States' commitment to protecting federal funds from fraud and abuse," said David W. Ogden, Acting Assistant Attorney General in charge of the Civil Division. "The Medicare system operates on the good faith and honesty of its providers, and we cannot tolerate misuse of the reimbursement system by clinical testing laboratories for financial gain."

Today's $53 million settlements are part of the Departments of Justice and Heath and Human Service's concerted effort to recover funds for the Medicare Trust Account that were paid as a result of fraud or abuse, and were part of a joint effort between the U.S. Attorney's Office for the Middle District of Florida, the Department of Justice Civil Division, the Inspector General's Office of Investigations of the Department of Health and Human Services (HHS), the Defense Criminal Investigative Service and the Federal Bureau of Investigation. These efforts to combat fraud were strengthened considerably by the Health Insurance Portability and Accountability Act of 1996 (HIPAA). HIPAA established a national Health Care Fraud and Abuse Control Program, under the joint direction of the Attorney General and the Inspector General of HHS. HIPAA provided much needed and powerful new enforcement tools and financial resources that permitted the government to expand and intensify the fight against health care fraud.

"This significant civil healthcare fraud settlement should send a clear signal to all health care providers who receive federal funds, whether from the Medicare, Medicaid or TRICARE health insurance programs, that the United States is keeping a watchful eye on all claims for payments by these providers and is firmly committed to protecting these vital taxpayers funds from fraud or misuse," said Donna A. Bucella, United States Attorney for the Middle District of Florida.

As part of the settlement, GAMBRO and GHSLI entered into a comprehensive five-year corporate integrity agreement with the Department of Health and Human Services' Office of Inspector General. Under the corporate integrity agreement, which is designed to promote compliance with all federal health care program requirements, the companies will provide compliance training to employees, undergo annual independent audits and submit annual reports to the Office of Inspector General.

"The corporate integrity agreement provides important safeguards to prevent misconduct and requires ongoing monitoring of the companies to help ensure compliance with federal health care program requirements," Inspector General June Gibbs Brown said.

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