Have a Claim?

Click here for a confidential contact or call:

1-212-350-2774

DOJ Catch of the Week -- DaVita

Posted  October 24, 2014

By the C|C Whistleblower Lawyer Team

This week’s Department of Justice “catch of the week” goes to DaVita Healthcare Partners, Inc., one of the leading providers of dialysis services in the United States.  On Wednesday, the Denver-based company agreed to pay $400 million to resolve claims it violated the False Claims Act by paying kickbacks for patient referrals to its dialysis clinics.  It apparently is the largest ever False Claims Act settlement solely covering kickbacks in the healthcare industry.  See DOJ Press Release.

According to the government, for the past decade DaVita used a sophisticated three-part joint venture business model to induce patient referrals to its clinics.  First, DaVita identified physicians or physician groups with significant patient populations suffering renal disease.  Second, DaVita offered the targeted physicians a lucrative joint venture opportunity involving either DaVita’s acquisition of an interest in dialysis clinics owned by the physicians or DaVita’s sale of an interest in its dialysis clinics to the physicians.  If DaVita was buying into a clinic, it would significantly overpay.  If DaVita was selling an interest in one of its own clinics, it would practically give it away.  Third, DaVita entered into a series of secondary agreements with its physician partners through which DaVita could funnel kickbacks masked as joint venture profits.  These agreements also provided payments for the physicians’ agreement not to compete against DaVita or send their patients to competing clinics.

The $400 million payout will be allocated as follows: $350 million will go to the federal government to settle the False Claims Act charges; $39 million will be paid as part of a Civil Forfeiture relating to two specific joint venture transactions; and $11.5 million will go to settle related state false claims act charges.  In announcing this settlement, the government made it clear that it will not tolerate the type of kickback arrangements in which DaVita is alleged to have engaged.  “Companies seeking to boost profits by paying physician kickbacks for patient referrals . . . undermine impartial medical judgment,” said Daniel R. Levinson, Inspector General for the US Department of Health and Human Services.  “Expect significant settlements and our continued investigation of such wasteful business arrangements.”  The allegations in this case originated from a whistleblower lawsuit brought by former DaVita Senior Financial Analyst David Barbetta under the qui tam provisions of the False Claims Act.  Mr. Barbetta’s share of the government’s recovery has yet to be determined.

Tagged in: Catch of the Week,