DaVita Healthcare Partners, Inc. ("DaVita") is a large provider of kidney dialysis treatment in the United States. The medical giant, as part of its first quarter SEC filings, disclosed that it has allotted $450 million to settle a False Claims Act ("FCA") case. Two whistleblowers brought the suit against DaVita alleging that the company defrauded the government by overcharging the Medicare system. The plaintiffs alleged that DaVita used "larger-than-necessary medicine vials or unnecessarily spread medicine dosages across multiple treatments knowing that Medicare would pay for what it considered 'unavoidable' waste."1 The company's leadership was accused of creating a procedure for employees to provide dosages of the drug Venofer, which treats anemia in patients with kidney disease, "over several treatments instead of one to increase reimbursements."2
The $450 million settlement would be a record for an FCA settlement in which the United States Department of Justice did not intervene. In a statement by DaVita's Legal Officer, Kim Rivera, she said that while DaVita believed that it had strong arguments against the allegations, it felt settling the case was more prudent for investors and for the financial health of the company. She said, "the potential mandatory penalties for being found in the wrong in even a small percentage of instances were simply too large."3
The case was originally brought in 2007 by a nephrologist and a registered nurse who were employees at DaVita. They alleged that the misconduct regarding Medicare reimbursements took place from at least 2003 through 2010. In 2014, during discovery in the case, DaVita was sanctioned when a judge found that the company gave false information regarding the computer program called "Snappy," which the company used to determine Venofer dosages.4
This case is not the first time DaVita has had legal issues due to the FCA. In 2012, the company paid $55 million to settle an FCA case in which whistleblowers alleged that it overbilled Medicare for reimbursements of another anemia drug, Epogen. Again in 2014, DaVita paid the United States $350 million to settle a case in which the company was accused of "persuading physicians or physician groups to refer their dialysis patients to DaVita by offering kickbacks for each patient referred."5 All of these lawsuits were brought by former employees under the whistleblower provision of the FCA.
This blog has discussed several recent cases of Medicare fraud, as well as how much effort and how many resources the U.S. Government is utilizing to mitigate the problem. Despite the U.S. not intervening in this case, attorneys for the former employees were still able to seek out potential Medicare fraud because of the FCA and its whistleblower provision.
The legal team at SFMS has significant experience litigating whistleblower matters. If you have any questions regarding this subject or this posting, please contact Valerie Chang (firstname.lastname@example.org) or Michael Ols (email@example.com). We can also be reached toll-free at (866) 540-5505.
Shepherd Finkelman Miller & Shah, LLP is a law firm with offices in California, Connecticut, Florida, New Jersey, New York, Pennsylvania and Wisconsin. SFMS is an active member of Integrated Advisory Group (www.iaginternational.org), which provides us with the ability to provide our clients with access to excellent legal and accounting resources throughout the globe. For more information about our firm, please visit us at www.sfmslaw.com.