HMOs And Gambro Unable To Talk So Far

June 5, 2002
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GRAND RAPIDS — A mediation meeting between three managed care companies and Gambro Healthcare Inc. was postponed for the second time last week. A third session has been tentatively scheduled for the middle of August.

Late last year, Priority Health and Grand Valley Health Plan filed a joint lawsuit in U.S. District Court accusing Gambro of overcharging subscribers for kidney dialysis treatments. Priority and Grand Valley alleged that Gambro billed their patients by at least $2 million over the going rate for the service in other markets.

Since that filing, Care Choices has joined Priority and Grand Valley as a plaintiff. A new recovery figure hasn’t been determined yet.

“But it will certainly add to the claim in the lawsuit,” said Dan Gravelyn, a partner and antitrust attorney with Warner, Norcross & Judd, who represents the plaintiffs.

In December, Gambro asked that two references to a settlement agreement that the firm made with Michigan Attorney General Jennifer Granholm be removed from the HMO’s complaint. Gambro argued that a contract made with a state official didn’t belong in a federal lawsuit, and Magistrate Judge Joseph Scoville agreed.

“We have since filed an amended pleading that deletes reference to those two,” said Gravelyn. “The court did that because it said that in the pleading itself we had not made the case that the Attorney General’s action would be relevant and admissible as evidence in the federal action.”

But Gravelyn added that Scoville did not limit discovery by keeping references to the agreement out of the process.

“It turned out not to make a whole lot of difference at all because we’ve had full access to those discovery materials,” he said. “I think what Gambro was attempting to do was to get the references out of the complaint, and then argue that since it was not relevant in the complaint, we can’t take discovery. But the judge saw that coming and put an end to it.”

In 1999, under the state’s antitrust reform act, Granholm charged Gambro and one of its affiliates with illegally monopolizing the kidney dialysis market in West Michigan. The Attorney General called the company greedy and reported that Gambro billed area patients and insurers 360 percent more than what was being charged in other markets.

Last July, Granholm announced that the state had reached a settlement with Gambro. The agreement required the company to sell three of its six West Michigan clinics; to pay $175,000 in costs, civil penalties and attorney fees; and to donate $175,000 to the National Kidney Foundation with 75 percent of those dollars earmarked for West Michigan.

Prior to the settlement, Granholm said Gambro controlled 95 percent of the kidney dialysis market in West Michigan through the half-dozen outpatient clinics it bought in the region in 1998.

Gambro Healthcare is the American subsidiary of Gambro AB, an international medical technology and health-care company based in Stockholm, Sweden.

If the two sides don’t reach a resolution, U.S. District Court Judge David McKeague will hear the case in Lansing. A hearing date has not been set.

Gravelyn said the first mediation meeting was postponed because Care Choices decided to join the lawsuit, a move that drastically altered the complaint. Last week’s meeting didn’t come off because the federal mediator had to appear in court on another matter.

“In the meantime, the parties are exchanging records and things like that. So there are things that aren’t very exciting going on,” said Gravelyn. “It just takes time.”

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