DaVita Healthcare Partners, Inc., one of the two dominant corporate providers of dialysis services in the US, has agreed to pay US$350 million to resolve charges that it violated the False Claims Act when it paid kickbacks for patient referrals.
The charges were initially brought in a whistleblower lawsuit by David Barbetta (.pdf; 12.3MB), formerly DaVita’s senior financial analyst in its mergers and acquisitions department. Barbetta alleged that between 1 March 2005 and 1 February 2014, DaVita sold interest in its dialysis clinics to individual physicians and physician groups (or purchased an interest in clinics the physicians owned) who would then refer their end-stage renal disease (ESRD) patients to those dialysis clinics for dialysis treatment.
David Barbetta’s whistleblower complaint against DaVita.
Additionally, DaVita’s secondary agreements with physicians included non-compete and non-disparagement provisions preventing the physicians from referring their patients to other dialysis providers. These secondary agreements allowed for additional payments to participating physicians serving as medical directors of the joint-venture dialysis clinics.
The value of the transactions would be decreased significantly by DaVita to benefit the participating physicians; in some cases pre-tax annual returns exceeded 100 percent. In one example cited by Corporate Crime Reporter, “… DaVita agreed to pay US$5,975,000 to acquire a 60 percent interest in the group’s clinic, while selling a 40 percent interest in the three clinics it owned for a total of US$3,075,000.” Nice work if you can get it.
DaVita has separately agreed to pay a US$39 million civil asset forfeiture fine for how it handled two joint-venture transactions in Denver.
DaVita settlement agreement with the US Department of Justice and David Barbetta.
Finally, DaVita has entered into a Corporate Integrity Agreement (.pdf; 786.4KB) with the Inspector General of the US Department of Health and Human Services’s Office of Council requiring it to unwind some of its joint ventures. Additionally, an independent monitor will be appointed to review DaVita’s business arrangements with nephrologists and other healthcare providers.
Christopher N. Osher writing for the Denver Post, reports that DaVita “said it planned to end joint ventures with kidney doctors involving 26 dialysis clinics. Those clinics were operated through 11 joint ventures DaVita had reached with kidney doctors.”