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The many extracts on these pages are from copyright material. They are owned by the reference given or its owner. They are reproduced here for educational purposes and to stimulate public debate about the provision of health and aged care. I consider this to be "fair use" in the common interest. They should not be reproduced for commercial purposes. The material is selective and I have not included denials and explanations. I am not claiming that the allegations are true. The intention is to show the general thrust of corporate practices as well as the nature and extent of any allegations made. Any comments made are based on the belief that there is some substance at least to so many allegations.

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Introductory page
This corporate web site addresses the issues of corporate health care within a broad framework. A web page describing this broad context should be considered as an introduction to each page on the web site. If you have not yet read it then CLICK HERE to open it in another tab or web page.

Content of this page
Fresenius is a German multinational providing dialysis equipment and services, as well as a number of similar products and services. It has paid the largest fraud and criminal settlement in the sector and is once again under investigation. It now operates dialysis services in Australia.

US section

Fresenius

  

CONTENTS


History

The Hirsch Pharmacy founded in Germany in 1462 fell into the hands of the Fresenius family in the 18th century. The company was founded by Dr Eduard Fresenius in 1912.  It expanded into infusion therapy in 1955, and dialysis in 1966.  It floated on the stock market in 1986.  It has steadily expanded internationally by acquisitions and growth.  Its current operations include pharmacology, infusion therapy, enteral feeding (tube feeding), parenteral nutrition, blood substitutes, medical devices as well as dialysis.

2008 About Fresenius
It operates in Germany, Italy, Spain, France,  Austria, Great Britian, Switzerland, Netherlands, Belgium, Norway, Sweden, Poland, Turkey, Canada, Mexico, Brazil, China, Korea, Australia, South Africa, Portugal Argentina, Chile, Japan and the USA.

ABOUT US - HISTORY - follow Fresenius Kabi through time http://www.fresenius-kabi.at/internet/kabi/at/fkintpbn.nsf/Content/2C+HISTORY accessed July 2008
Fresenius is a global health care group with products and services for dialysis, the hospital and the medical care of patients at home.

The Fresenius Group consists of the following four business segments that are responsible for their own business operations worldwide: Fresenius Medical Care, Fresenius Kabi, Fresenius Helios and Fresenius Vamed.
Welcome to Fresenius SE http://www.fresenius.com/ accessed July 2008

 


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Kidney Transplants in China

Fresenius found itself cooperating with and providing dialysis services to patients who were being sold organ donations using organs from executed criminals in China.   It hurriedly backed away.

Mar 1998 Organ's from executed prisoners
A German company has abruptly announced that it is abandoning its half-interest in a kidney dialysis center in Guangzhou, China, admitting that Chinese military officials had probably made it an unintentional accomplice in the selling of organs from executed prisoners to wealthy foreigners.

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Fresenius, which acquired its stake in the center from W.R. Grace & Co. in late 1996, said it had conducted its own investigation and discovered that foreign patients were receiving dialysis treatment at the center and may well have been "receiving kidney organs harvested from executed Chinese criminals."
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The announcement was made less than two weeks after FBI agents arrested two Chinese government officials in New York and charged them with trying to market human organs in the United States that came from executed political prisoners.
German Firm, Fearing Role in Organ Sales, Drops China Dialysis Center  The New York Times, March 7, 1998

 


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The USA

1996 Fresenius arrives in the USA ( accessed Aug 2008)
Fresenius Medical Care is a German company specializing in the production of medical supplies, primarily to facilitate or aid renal dialysis. It is 37%-owned by the health care company Fresenius SE. The company was formed in 1996 from the merger of Fresenius Worldwide Dialysis, then a division of Fresenius SE, and American company National Medical Care. This sector is very complex, and has many different divisions, each with a number of plants.
Fresenius Medical Care  From Wikipedia, the free encyclopedia http://en.wikipedia.org/wiki/Fresenius_Medical_Care accessed August 12, 2008

 

Expansion

Fresenius has operated in the USA since 1996 when it merged with National Medical Care.  In 1999 it acquired the international home care services of Caremark, an infusion company spun off from Baxter in 1992. Caremark had paid a US $161 million criminal and civil settlement in 1995.  It fell into the hands of Medpartners and Heathsouth where it was controlled by the notorious Richard Scrushy for some years.

Fresenius expanded in the USA.  In 2005 it bought Renal Care Group, another company under investigation for fraud.  It expanded into the pharmaceutical business in 2008.

Jul 1998 Acquisitions
QualiCenters was swallowed by kidney-giant Fresenius, which runs kidney centers in 34 states, the District of Columbia and Puerto Rico
FOR-PROFIT MEDICINE SWEEPING INTO TOWN : BIG CHAINS GRAB TURF FROM NONPROFIT HOSPITALS The Spokesman Review July 26, 1998

Aug 1999 Buys part of Caremark
Birmingham, Ala.-based MedPartners, the nation's largest physician practice management company, said it has agreed to sell its Caremark International subsidiary's Canadian and overseas home-care operations to Fresenius AG of Germany.
MedPartners, Fresenius in deal MODERN HEALTHCARE Aug. 26 1999

Aug 2005 Buys Renal Care Group

Dialysis provider Renal Care Group, Nashville, announced that it has become the latest in a group of dialysis providers to receive a subpoena from the U.S. attorney's office in St. Louis. The subpoena seeks records relating to pharmaceutical and other services.
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.Renal Care said the subpoena shouldn't affect its $3.5 billion sale to Fresenius, which is expected to close by the end of the year.
Dialysis Drugs Pharmaceutical  fraud : Renal Care latest to be subpoenaed in dialysis probe Modern Healthcare (Daily dose) 10 Aug 2005 

Aug 2008 Buys into drugs
Fresenius paying $3.7B for US drugmaker APP AOL News August 7, 2008 http://www.aol.com.au/news/story/Fresenius-paying-$37B-for-US-drugmaker-APP/685001/index.html

 


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Fraud

Fresenius became part of the dialysis fraud scandal in 2000 paying a massive US $486 million criminal and civil settlement. It entered into an 8 year integrity agreement. The fraud commenced at National Medical Care, a company acquired in 1996.  Fresenius was soon to claim that the fraud occurred before it acquired the company and that it put a stop to it.

Dec 1998 Past fraud in a subsidiary
Federal securities regulators accused W. R. Grace & Company and six of its former executives of fraud yesterday, saying that the company had deceived shareholders over five years by falsely reporting earnings.
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Regulators said that by using the false accounting, the company was able to report that revenue was on the rise for its health care group from 1991 to 1993, even though actual revenue was declining.
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The revenue that the S.E.C. is questioning was earned by a Grace subsidiary, National Medical Care Inc. of Waltham, Mass. The company sold National Medical Care, which operates kidney dialysis clinics, to Fresenius A.G. of Germany in 1996.
S.E.C. Charges Grace and 6 Former Executives With Fraud The New York Times December 23, 1998

Jan 2000 Pays US for $486 million criminal and civil settlement
Today, the largest provider of dialysis services in the United States has agreed to pay $486 million in criminal fines and in civil penalties to resolve allegations that the company engaged in a wide-ranging conspiracy to defraud Medicare and other federal health care programs. National Medical Care, now also known as Fresenius Medical Care, North America, has agreed to pay $101 million, the largest criminal fine, and $385 million, the largest civil recovery, in a health care fraud case to resolve allegations that the company submitted false claims for laboratory tests and conspired to pay illegal kickbacks.
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The three divisions (of National Medical Care): LifeChem, Medical Products and Homecare, have agreed to plead guilty to various criminal charges. LifeChem has agreed to plead guilty to conspiracy to submit false claims for certain lab tests; Medical Products will plead guilty to conspiring to offer and pay kickbacks to induce dialysis facilities to order laboratory blood testing services from LifeChem to be paid by Medicare; and Homecare has agreed to plead guilty to obstructing government agencies in the administration of various health care and health insurance programs including Medicare.
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Also on the criminal side, two high-level executives already have pleaded guilty to felony crimes, and three other executives currently are under indictment.
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 In addition, the divisions of National Medical Care that plead guilty will be excluded permanently from participation in the Medicare program under an agreement subject to court acceptance.

Announcement of Criminal Pleas and Civil Settlements United States v. Fresenius (National Medical Care) Boston, Massachusetts Deputy Attorney General January 19, 2000 http://www.usdoj.gov/archive/dag/speeches/2000/nmichaelhealthremarks.htm

Jan 2000 What it did

Federal officials said Wednesday that National Medical Care Inc. used Medicare and other government health insurance programs to pay for hundreds of needless tests for patients suffering from kidney disease, a condition that frequently requires patients to receive dialysis.
Part of the scheme involved misrepresenting patients' weight loss to justify using an expensive nutritional therapy - when the loss actually had nothing to do with their kidney disease. In at least one case, officials said, the weight loss was due to the amputation of a leg.
Company executives also obtained referrals of lab business by paying kickbacks. Lavish dinners, a yacht excursion and a bear-hunting trip in Canada were used as inducements, federal prosecutor Mark W. Pearlstein said.
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John Markus, senior vice president for corporate compliance with Fresenius, stressed - as federal officials did - that National Medical Care's fraudulent practices stopped soon after Fresenius acquired the company.
Feds Settle $486M Health Fraud Case
Associated Press January 19, 2000

Jan 2000 It was whistleblower initiated

Under terms of the civil settlement, whistleblowers will collect $65.8 million of the $385 million civil recovery, officials said. Dialysis firm to pay $486 million for fraud The Patriot Ledger January 20, 2000

Feb 2000 Whistleblower

A private whistleblower alleged the company (Fresenius) submitted false claims for laboratory tests and conspired to pay illegal kickbacks.
Govt's False Claim Recoveries Rise AP Online February  25, 2000

Mar 2000 Corporate Integrity Agreement for 8 years
Corporate integrity agreements typically run for five years, but the Fresenius agreement will last eight years and covers every aspect of the company's business with Federal healthcare programs

Fresenius Settles Fraud Charge For $486 Million - Medicare fraud alleged at National Medical Care subsidiary Healthcare Financial Management,  March, 2000

Mar 2002 The states get their cut for Medicaid fraud

The settlement, which will pay $7.3 million total to state Medicaid programs in all 50 states and the District of Columbia, resolves an investigation by the states and the federal government of health care fraud at National Medical Care Inc. (NMC), a Fresenius kidney dialysis subsidiary.
Nixon recovers $161,000 for Missouri Medicaid program in nationwide settlement with Fresenius Medical Care  Missouri Attorney General Jay Nixon : Attorney General's News Release March 15, 2002 http://ago.mo.gov/newsreleases/2002/031502.htm

 

The futility of integrity agreements in vulnerable sectors when faced by strong market pressure is illustrated again.  Less than 5 years into its 8 year integrity agreement Fresenius came under investigation again. By the end of 2007 Fresenius was facing another whistle blower initiated fraud suit.   This has not yet been resolved.

Apr 2005 Another investigation
Fresenius Medical Care AG, a global dialysis chain with North American headquarters in Lexington, is under the microscope again just five years after it reached a $486 million Medicare fraud settlement with the government.

The company disclosed yesterday that it received a subpoena as part of a broadening federal investigation into the business practices of several large chains that dominate the nation's for-profit dialysis industry.

Investigators for US Attorney James G. Martin in St. Louis asked Fresenius to turn over records about medical director compensation, physician relations, anemia treatments for dialysis patients, and other aspects of its business, the company said.
US fraud inquiry targets Fresenius  : Probe comes 5 years after dialysis chain settled Medicare case
The Boston Globe April 7, 2005 http://www.boston.com/business/articles/2005/04/07/us_fraud_inquiry_targets_fresenius/

Jul 2007 Another Qui Tam lawsuit alleging fraud
The Department of Justice joined a lawsuit against Fresenius Medical Care AG (FMS) and two of its units alleging false billings to Medicare.

DOJ Joins Suit Vs Fresenius Units Alleging Medicare Fraud Dow Jones News Service July 18, 2007

July 2007 Whistleblower alleges fraud at subsidiaries owned for 2 years

The Department of Justice (DOJ) has joined a whistleblower lawsuit alleging Medicare billing fraud by a pair of East Texas home care dialysis companies.
Renal Care Group (RCG) and Renal Care Group Supply Company (RCGSC) are alleged in the lawsuit to have billed Medicare for supplies and equipment provided to home dialysis patients over a six-year period beginning in 1999. The lawsuit states that the companies were prohibited from billing for these services and supplies.
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Both companies are owned by Fresenius Medical Care Holdings Inc., which is named in the lawsuit.
DOJ JOINS WHISTLEBLOWER SUIT AGAINST DIALYSIS COMPANIES Inside CMS Vol. 10, No. 15 July 27, 2007

Jul 2007 This is Fresenius itself
The lawsuit claims that "even after RCG employees raised concerns and industry competitors closed their supply companies" the company continued to operate its shell supply company "because of the illicit revenue it created."
DOJ JOINS WHISTLEBLOWER SUIT AGAINST DIALYSIS COMPANIES Inside CMS Vol. 10, No. 15 July 26, 2007

Jan 2008 Yet another Qui Tam law suit against Fresenius

Federal authorities are investigating Medicare fraud allegations involving millions of dollars set out in two recently unsealed civil lawsuits against Fresenius Medical Care of North America, which operates four clinics in El Paso, according to federal court documents.

Last month, U.S. District Judge Phillip Martinez unsealed the whistleblower complaint filed under the False Claims Act by Rebecca Gonzalez against her former employer, Fresenius, and Dr. Alfonso Chavez.
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The suit states that the FBI executed a search warrant at the Cliffview clinic in January 2007.
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In the False Claims Act case, Gonzalez alleged that Chavez was the supervising physician at the Fresenius clinics on Cliff-view and at 10767 Gateway Blvd. West where Ramiro Debora was allowed to treat patients as if he were a doctor.

"Debora is neither a licensed physician, nor a physician's assistant," the case states. "Defendants, through their management and operations at the facilities, are well aware of Debora's lack of licensure and credentialing."
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"Patients come to the Cliffview and Gateway clinic and ask to speak to 'Dr. Ramiro,' " Gonzalez alleges in the case. "Defendants and Debora encourage this illusion by bearing a white lab coat.
"Chavez has admonished and threatened employees who informed patients that Debora is not a physician."
Federal authorities are investigating Medicare Fraud allegations involving Fresenius Medical Care of North America Medicare’s Most Wanted web site January 8, 2008 http://medicaresmostwanted.blogspot.com/2008/01/federal-authorities-are-investigating.html

 


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The Stock Options fraud

Reports suggest that Fresenius is one of the companies caught up in the options backdating fraud.

Jul 2007 Stock Options fraud
The Securities and Exchange Commission is currently investigating about 140 companies in its expanding probe of stock-option granting practices, The Wall Street Journal reported. On March 5, the Journal reported that the stock options scandal helped boost by 50% the number of companies filing their annual reports late
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The following is a list of all the other companies that have commented on the stock option investigations:
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Fresenius Medical Care AG KGAA (FMS)
Companies Responding To Stock Option Investigations Dow Jones News Service July 27, 2007

 


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Quality of Care matters

One of the companies purchased by Fresenius was prosecuted for making defective tubing for dialysis.

Dec 1999 Defective equipment but before Fresenius purchased the subsidiary
Attorneys for NMC Medical Products Inc. admitted in U.S. District Court in Newark that the company sold defective plastic tubing that connected patients with bad kidneys to dialysis machines that cleaned their blood.

The company failed to follow procedures that would have shown the tubing could generate tiny air bubbles that could imperil patients, records show.
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NMC also admitted that it failed to tell the U.S. Food and Drug Administration about 1,196 incidents between November 1992 and December 1994 in which its tubing and other equipment were defective.
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The company was based in Rockleigh until 1996, and is now owned by a German-based company, Fresenius Medical Care.
COMPANY ADMITS IT SOLD DEFECTIVE DIALYSIS TUBING PLEADS GUILTY, WILL PAY $3.8M FINE The Record December 23, 1999

 


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Fresenius in Ireland

While Fresenius worrying association with fraud raised few eyebrows in Australia, Irish groups and Irish newspapers were very critical when it was awarded contracts in their country.  Quest is another company with a tarnished track record in the USA.

May 2008 Objections to Fresenius in Ireland
Health campaigners say they are outraged at the awarding of multi-million state contracts to health care corporations who have topped the league in criminal fraud fines in the United States. 'Fresenius's staggering fraud payments to the US Government puts Quest's in the shade, ' said Marie O'Connor.
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'The Fresenius dialysis contracts raise the issue of what constitutes due diligence' said Dr John Barton, consultant physician and Health Services Action Group Vice-Chair. The quality of patient care is at stake, he underlined, as well as taxpayers' money. 'Can HSE now explain how having a history of fraud payments in the United States is compatible with due diligence in awarding multi-million health care contracts?
Dialysis giant under multi-million HSE contract topped US Government criminal fraud fine league indymedia Ireland from Health Services Action Group May 19, 2008 http://ireland.indymedia.org/article/87613?condense_comments=true

Objections to Fresenius in Ireland
THE Health Service Executive was last night accused of putting money before patients' lives after it became embroiled in yet another controversy over the awarding of State contracts to companies involved in fraud scandals.
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The HSE last night said it could not confirm if Fresenius’s financial background was known to health managers who awarded the lucrative State contract to the company.
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She (company spokesperson) claimed it related to a company Fresenius took over in the mid 1990s.


However she admitted the settlement “wasn't something that we ever gave details of ” to the HSE.
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Ms Houghton said Fresenius took over another company, National Medical Care, in 1996. They subsequently discovered there was an investigation under way by the FDA into practices in the organisation.
HSE gave contract to fraud scandal company The Independent May 20 2008 http://www.independent.ie/health/lastest-news/hse-gave-contract-to-fraud-scandal-company-1380673.html

May 2008 Fresenius justifies

Dialysis firm moves to allay fears over fraud settlement The Irish Times,com May 20, 2008

 


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Fresenius in Australia

Fresenius is one of the three large multinationals providing dialysis services in Australia. Their involvement is described on another web page.

Click Here to go to the Australian web page


Fresenius web pages can be found at http://www.fresenius.com/ and http://www.fmc-ag.com/

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This page created August 2008 by Michael Wynne