Last May, DaVita Healthcare Partners, Inc. — one of the world’s two largest dialysis services providers — created a US$300 million reserve fund to settle pending criminal and civil investigations into the company’s alleged wrongdoing. Recently, the company set aside an additional US$97 million for its legal reserve fund.
In a media release, the company indicates that this may not be the end of additions to its legal reserve fund:
“We are engaged in good faith discussions with the attorneys from the United States Attorney’s Office for the District of Colorado, the Civil Division of the United States Department of Justice and the Office of the Inspector General in an effort to find a mutually acceptable resolution to the 2010 and the 2011 US Attorney Physician Relationship Investigations. Discussions have advanced to a point where we believed it was appropriate to accrue an additional US$97 million to our estimated loss contingency reserve in the current quarter, which brings the total estimated loss contingency reserve to US$397 million as of September 30, 2013, in connection with offers to settle the related civil, administrative and criminal matters. However, the discussions are ongoing, and until concluded, there can be no certainty about the timing or likelihood of a definitive resolution or the scope of any potential restrictions or impact on future operations that may be agreed upon in connection with a settlement. As these discussions proceed and additional information becomes available to us, the amount of the estimated loss contingency reserve may need to be adjusted further to reflect this new information.”
DaVita reported adjusted income of US$605.3 million for the first nine months of 2013.
Shortly after DaVita’s earnings report, Warren Buffett’s Berkshire Hathaway, Inc. purchased almost 3.7 million additional shares of the dialysis service company, bringing its total holdings in the dialysis services company to 35.1 million shares. Berkshire now owns close to 16.5 percent of DaVita, within its agreement not to buy more than 25 percent of the company unless both parties agree.
[Disclosure: I’ve been a DaVita in-center hemodialysis patient since February 2000.]