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Fresenius (FMS) Faces Fraud Accusation From US Government

·4 min read

Fresenius Medical Care AG FMS has allegedly defrauded Medicare and other healthcare programs per a complaint filed by the United States Department of Justice (DoJ) in the federal court in Brooklyn. The U.S. government accused Fresenius Vascular Care, a business unit of FMS, of performing unnecessary procedures on dialysis patients with End Stage Renal Disease (ESRD) at nine centers across New York City and Long Island between Jan 1, 2012 and Jun 30, 2018. The company performed certain procedures without sufficient clinical indication that the patients needed the procedures.

The unnecessary procedures included fistulagrams and angioplasties required for visualizing the port and surrounding blood vessels and restoring the patient’s blood flow, respectively.

The U.S. government’s complain also states that the alleged unnecessary procedures were billed to Medicare, Medicaid, the Federal Health Benefits Program and TRICARE. The complaint also alleged that Fresenius did these procedures intentionally to drive its revenues. The federal government seeks damages and penalties under the False Claims Act with this complaint, which was filed in the ongoing action against Fresenius.

The U.S. government is entitled to recover thrice the amount of each fraud claim along with a civil penalty ranging from $5,500 to $25,076 per violation, which will likely aggregate to hundreds of millions in charges for Fresenius. The potential charges will significantly hurt the company’s financial position.

Shares of Fresenius were down 2.5% on Jul 13, following the fraud allegations by the federal government. The company derives a key portion of its revenues from reimbursements made by Medicare and other healthcare program. Any regulatory setback following the lawsuit will hurt its top line. Shares of Fresenius have declined 28.5% so far this year compared with the industry’s decrease of 30.8%.

Zacks Investment Research
Zacks Investment Research

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The United States Attorney stated that Fresenius not only defrauded federal healthcare programs but also unnecessarily compromised patient care, particularly vulnerable people, including the elderly, disadvantaged minority, and low-income individuals.

Fresenius had faced fraud allegations in the United States earlier as well. In 2019, the company had to pay $231 million in criminal penalties to resolve investigations by the Department of Justice and the Securities and Exchange Commission. This payment was made in relation to Fresenius’s participation in various corrupt schemes, including bribery, to obtain business in multiple foreign countries.

Fresenius Medical Care AG & Co. KGaA Price

Fresenius Medical Care AG & Co. KGaA Price
Fresenius Medical Care AG & Co. KGaA Price

Fresenius Medical Care AG & Co. KGaA price | Fresenius Medical Care AG & Co. KGaA Quote

Zacks Rank & Stocks to Consider

Fresenius currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader medical space are AMN Healthcare Services, Inc. AMN, Patterson Companies, Inc. PDCO and ShockWave Medical, Inc. SWAV.

AMN Healthcare, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 1.1%. AMN’s earnings surpassed the Zacks Consensus Estimate in all four trailing quarters, the average being 15.6%.

You can see the complete list of today’s Zacks #1 Rank stocks here.

AMN Healthcare has gained 13.8% against the industry’s 32.7% fall in the past year.

Patterson Companies, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 9.6%. PDCO’s earnings surpassed estimates in all the trailing four quarters, the average being 16.5%.

Patterson Companies has lost 1.8% compared with the industry’s 10.5% fall over the past year.

ShockWave Medical, sporting a Zacks Rank of 1 at present, has an estimated growth rate of 44.9% for 2023. SWAV’s earnings surpassed estimates in all the trailing four quarters, the average being 189.9%.

ShockWave Medical has gained 7.9% against the industry’s 24.4% fall over the past year.

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Fresenius Medical Care AG & Co. KGaA (FMS) : Free Stock Analysis Report
Patterson Companies, Inc. (PDCO) : Free Stock Analysis Report
AMN Healthcare Services Inc (AMN) : Free Stock Analysis Report
ShockWave Medical, Inc. (SWAV) : Free Stock Analysis Report
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