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$34 Million False Claims Act Settlement Against DaVita, Inc.
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On July 18, 2024, a significant settlement was reached with a major kidney care company, DaVita Inc., which agreed to pay over $34 million to resolve allegations of False Claims Act violations. A former executive at DaVita escalated the allegations to the Department Of Justice (DOJ) utilizing the False Claims Act’s qui tam provisions. The FCA’s qui tam provisions allow private citizens with knowledge of fraud against the government to file a lawsuit on its behalf and receive a portion of the recovery as a whistleblower award if there is a settlement or judgment. As this case demonstrates, the importance of whistleblowers cannot be overstated when it comes to their role in exposing fraudulent activities such as kickbacks within the healthcare industry.
The Department of Justice alleged that the company engaged in multiple kickback schemes. (1) The company allegedly paid kickbacks to induce referrals to its former subsidiary, DaVita Rx, which provided pharmacy services for dialysis patients. These kickbacks came in several forms.
Referral Inducement
The company allegedly paid kickbacks to a competitor in exchange for that competitor referring its Medicare patients’ prescriptions to DaVita Rx. This arrangement entailed the company acquiring European dialysis clinics and then extending a prior commitment to purchase dialysis products from the competitor, which was done, according to the DOJ, only due to the competitor’s referral commitment. (2)
Physician Kickbacks
It was also alleged that the company paid kickbacks to nephrologists and vascular access physicians to induce the referral of patients to its dialysis centers. The company allegedly provided management services to vascular access centers owned by physicians who were well placed to refer patients to the company’s dialysis clinics. (3)
Additionally, the company allegedly paid improper remuneration to these physician-owners in the form of uncollected management fees to induce referrals to its dialysis centers.
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Additional Remuneration as a Kickback
The company is also alleged to have given a large nephrology practice the right of refusal to staff the medical director position at any new dialysis center that opened near the nephrology practice and paid the practice $50,000 despite the practice’s decision not to staff the medical director position for those clinics. (3)
These actions are violations of the Anti-Kickback Statute, which prohibits offering or paying anything of value to induce referrals of patients or services covered by federal healthcare programs like Medicare and Medicaid. (4)
Such kickbacks not only violate the law but also undermine the integrity of the healthcare system, potentially compromising patient care decisions. If a referral is motivated by money then the impartiality of the decision to refer for additional services has the appearance of impropriety, if not actual impropriety. It calls into question whether the referral was in the best interest of of the patient or of the provider being paid for the referral.
This settlement resolved claims brought under the qui tam, or whistleblower, provisions of the False Claims Act. A former chief operating officer of the company’s Kidney Care division acted as the whistleblower. The False Claims Act allows private parties to file actions on behalf of the United States when the taxpayers are defrauded through Medicare Fraud, Medicaid Fraud and other fraud against the government and in turn the whistleblower can receive a portion of the recovery up to 30%. The relator in this matter will receive more than $6 million as a whistleblower award for bringing the information to light, which equals approximately 18% of the total settlement of approximately $34 million. (5)
Whistleblower provisions are a vital part of the effort to combat fraud, allowing individuals with insider knowledge to report illegal activities with some protection.
The totality of settlements and judgments under the False Claims Act exceeded $2.68 billion in the fiscal year ending September 30, 2023. Of that total, more than $1.8 billion pertained to matters involving the healthcare industry. This fact emphasizes the magnitude of healthcare fraud and the importance of strong whistleblower laws. The government and whistleblowers were party to 543 settlements and judgments in that year- the highest number in a single year. Recoveries since 1986 now total more than $75 billion. (2)
If you have insider information about a healthcare company engaged in fraudulent activities, it is crucial to seek advice from a knowledgeable whistleblower attorney. Speaking to a whistleblower lawyer is the first step you should take before reporting anything to the government. A whistleblower lawyer can provide you with legal advice while maintaining the confidentiality of your identity and information, which is essential to protecting you from retaliation. Whistleblower cases are often complex, requiring a strong understanding of the False Claims Act or other whistleblower statutes and the legal processes involved. An experienced whistleblower attorney will guide you through this process, maximizing your chances of a successful claim.
DOJ Article on $34 Million DaVita Settlement
Healthcare Finance News Article on DaVita $34M Settlement
Healio Article on $34M DaVita Settlement
US Dept. of Health and Human Services – Fraud & Abuse Laws
