On Wednesday, Denver-based provider of dialysis services DaVita Healthcare Partners, Inc. agreed to pay $450 million to resolve charges it violated the False Claims Act by purposely creating and then billing the government for unnecessary waste in administering the drugs Zemplar and Venofer to dialysis patients. DaVita is the largest provider of dialysis services in the US with dialysis clinics in 46 states and the District of Columbia. See DOJ Press Releases here and here.
But what makes the settlement so remarkable is not just the heavy payout DaVita agreed to make for alleged False Claims Act violations. Afterall, it was only last fall that DaVita paid $400 million to resolve False Claims Act charges of paying kickbacks for patient referrals to its dialysis clinics, the largest kickbacks settlement ever. See DOJ Catch of the Week. What makes this latest DaVita settlement particularly special is the unprecedented amount of credit and attention the government gave the whistleblowers who brought the action. While the SEC has gone out of its way to hail whistleblowers under the Dodd-Frank Act, the DOJ has been a bit more muted in its love and appreciation for whistleblowers under the False Claims Act.
In announcing this settlement, however, it was all about the whistleblowers. Indeed, the DOJ’s Principal Deputy Assistant Attorney General Benjamin C. Mizer lead off the government’s press release by stressing how the “settlement is an example of what can be accomplished as a result of the successful cooperation between the government and whistleblowers in protecting our vital federal health care programs.” And in a parallel release from the US Attorney’s Office, Acting US Attorney for the Northern District of Georgia John Horn emphasized the “personal sacrifice and courage” of the two whistleblowers who brought this action to expose DaVita’s “knowingly wasteful dosing practices designed simply to increase profits and improperly drain the government’s resources.” The government’s affection and respect for the whistleblowers in this action could not have been made any clearer.
The two whistleblowers, Dr. Alon Vanier and nurse Daniel Barbir, filed their lawsuit against DaVita under the qui tam provisions of the False Claims Act. They charged DaVita with designing dosing grids and dosing protocols to create unnecessary waste of the drugs Venofer and Zemplar. These drugs are packaged in single-use vials and when the amount of the drug does not match the dosage specified by the physician, the left-over amount is thrown out. At the time of the alleged scheme, Medicare would still reimburse a dialysis provider for the discarded amount. According to the whistleblowers, DaVita purposely devised the dosages to maximize the amount discarded and thus maximize the Medicare reimbursement. So with the iron supplement Venofer, for example, which is packaged only in a single-use vial size of 100 mg, DaVita allegedly required nurses to administer this drug in small amounts and at frequent intervals to maximize wastage.
Acting US Attorney Horn credited the whistleblowers with returning “hundreds of millions of dollars to the treasury that had been improperly obtained by DaVita through these wasteful practices.” But as effusive as the DOJ was in its praise of these whistleblowers, it downplayed one key fact about how this litigation played out. That is, the whistleblowers pursued the litigation without any involvement or assistance from the government. Early on, the government decided not to intervene in the action, leaving it to the whistleblowers to carry the entire load of the litigation on their own. Interestingly, in the original version of the press release from the US Attorney’s Office, the government acknowledged it did not intervene in the case. It also specifically identified and complimented the whistleblower lawyers — Lin Wood, Marlan Wilbanks, Ty Bridges, Susan Gouinlock and Stacey Evans — involved in carrying the case forward.
For whatever reason, all this was removed in the revised press release that now stands. While this unexplained about-face is disappointing, it should not detract from the major step forward the DOJ has taken here in so highly promoting the very brave whistleblowers who alone with their lawyers fought the good fight against DaVita. Hopefully, this is just the beginning of a new way forward for the DOJ in giving whistleblowers the full credit they are due in standing up to this kind of fraud and misconduct.
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