The government has committed a daunting array of resources to un covering fraud that flourished in the wake of sharp cuts in Medicare in the late 1980s. The Damon case is one of several that resulted in guilty pleas or settlements. In 1994, National Medical Enterprises reached $362.7 million settlement of federal fraud charges involving the company's mental health unit.
The $35.3 million criminal fine in the Damon case, one piece of the $119 million total settlement, is the largest ever recovered in a health care fraud case. The bulk of the settlement, $83.7 million, was recovered for civil claims on behalf of Medicare, the Champus health cart program for civilian dependents of military personnel, and other agencies that were charged for lab tests by Damon.
The federal charges, filed yesterday in US District Court in Boston, said Damon carried out a deliberate scheme from 1988 through 1993 to obtain bigger reimbursements from Medicare for blood tests. For example, one of Damon Clinical's labs in Dallas charged the government in 1989 for a negligible number of tests to isolate a protein called apolipoprotein. By 1992, charges for that specific test had grown to more than $1 million. Damon had labs in 11 states, including one in Westwood.