Press Releases

Federal Government Joins Whistleblower Lawsuit Filed by Two Physicians Against Nationwide Dialysis Company

Cohen Milstein

May 12, 2022


On April 18, 2022, the United States partially intervened in a whistleblower lawsuit brought by Cohen Milstein Sellers & Toll, PLLC on behalf of our clients, Dr. John Pepe and Dr. Richard Sherman, against Fresenius Medical Care North America (“FMCNA”) and one of its business units, Azura Vascular Care (“Azura”), and several related entities. 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 patients annually. Azura operates more than 60 vascular care facilities across the country.

This lawsuit is brought under the federal False Claims Act and alleges that the defendants have for years performed repeated, unnecessary vascular procedures on end stage renal disease (“ESRD”) patients receiving hemodialysis treatments and have fraudulently charged Medicare, Medicaid and other government health care programs for these procedures. Medicare, the government health care program for the elderly, covers treatment of ESRD patients regardless of their age, spending well over $50 billion annually on their care.

The case is captioned U.S. et al., ex rel. Pepe and Sherman v. Fresenius SE & Co. KGaA et al., Civil Action No. 14-cv-3505, and is pending in the U.S. District Court for the Eastern District of New York. The case remained “under seal,” meaning that under Court order it was non-public, until the Court lifted the seal on May 9, 2022. The federal government is expected to file its own complaint in intervention in July 2022. Eighteen states are included in the lawsuit and have an opportunity to join it in the future as well.

The whistleblowers are highly trained, board-certified nephrologists with decades of experience successfully caring for ESRD patients who receive hemodialysis treatments several times weekly to remove toxins from their blood when their kidneys can no longer do so.

In their complaint, the whistleblowers allege that the defendants have engaged in a fraudulent scheme to receive government payments for unnecessary surgical procedures and testing. ESRD patients typically require a surgically-created access to their vascular system so that adequate hemodialysis can take place and thereby cleanse the blood as healthy kidneys otherwise would. The patient’s dialysis unit is charged with responsibility for monitoring that vascular access regularly and for making a referral to a vascular access facility for possible surgical intervention in the event that clinical evidence indicates that there exists a narrowing (or a “stenosis”) in one or more of the vessels used during hemodialysis that impairs the ability of hemodialysis to occur.

The complaint alleges that for many years, once a nephrologist has initially referred a patient with evidence of a clinically significant stenosis to an Azura facility, and the patient’s vascular access has been treated there, Azura then continues scheduling periodic follow-up visits every 2 to 4 months indefinitely. Almost every time these follow-up visits occur, Azura performs an angiogram on the patient (an X-ray using a chemical dye injected into the patient’s vessels), followed by an invasive surgical procedure called an angioplasty. These procedures are performed without evidence of problems in administering dialysis and without a referral by the patient’s nephrologist.  Thus, the defendants have no reasonable basis for performing these medically unnecessary procedures and they are not reimbursable by the government health care programs. Nevertheless, defendants have submitted, or caused to be submitted, these fraudulent claims for payment and the government has, in good faith, paid them.

As Dr. Pepe, who has successfully treated hundreds of ESRD patients during a distinguished medical career, explains, “Dialysis patients are highly vulnerable and must trust their doctors to look out for their best interests. We believe that Fresenius has acted for financial gain at the expense of the patient and the U.S. taxpayer.”

This partial intervention is the culmination of the federal government’s comprehensive, detailed, and sophisticated investigation of Dr. Pepe’s and Dr. Sherman’s allegations. The government team is led by Jolie Apicella, Chief of the Health Care Fraud Unit for the U.S. Attorney’s Office, Eastern District of New York. The two physicians are represented by Jeanne A. Markey and Gary L. Azorsky, co-chairs of Cohen Milstein’s whistleblower practice, based in Philadelphia, Pennsylvania, and their colleague in the practice group, Raymond M. Sarola. Dr. Pepe is also represented by Vincent F. Pitta of Pitta LLP, located in New York City.

About Cohen Milstein Sellers & Toll PLLC

Cohen Milstein Sellers & Toll PLLC is recognized as one of the premier law firms in the country, handling complex plaintiff-side litigation. With more than 100 attorneys, Cohen Milstein has offices in Washington, D.C., Chicago, IL, New York, NY, Palm Beach Gardens, FL, Philadelphia, PA, and Raleigh, NC.