DaVita Settles Whistleblower Lawsuit For $350 Million

December 1, 2014 — A medical treatment provider is prohibited by law from billing government programs for services to patients referred by doctors who have a financial interest in the medical facility. The U.S. Justice Department uses the False Claims Act to reclaim millions of dollars each year that would otherwise be lost to Medicare fraud involving illegal kickback schemes. Under the qui tam provisions of the statute, insiders who discover fraudulent Medicare schemes are given the ability to bring a whistleblower lawsuit against those involved for the benefit of the government. Informants keep a share of the government’s recovery.

DaVita Allegedly Paid Illegal Kickbacks To Physicians Who Referred Dialysis Patients To Company’s Clinics

DaVita Healthcare Partners, Inc. will spend $350 million to settle a whistleblower lawsuit alleging False Claims Act violations against the company. With headquarters in Denver, Colorado, DaVita runs dialysis clinics in all but four states and is one of the leading dialysis services providers in the nation. In a qui tam lawsuit, David Barbetta, a former Senior Financial Analyst in DaVita’s Mergers and Acquisitions Department, alleged that DaVita paid kickbacks to physicians as an inducement for their referral of patients to the company’s dialysis clinics.
From 2005 to 2014, DaVita reportedly employed a three part strategy to lure patient referrals. First, DaVita developed a plan for vetting physician practice groups that were likely participants in a “joint venture” referral scheme. The doctors all had large patient groups with renal disease who lived within a well-defined geographic area. A so-called “winning practice” might include younger doctors who were carrying a particularly heavy debt load.
Second, DaVita offered the winning practice groups the chance to joint venture with DaVita by allowing the dialysis provider to acquire an interest in dialysis clinics that the physicians owned or by allowing the doctors to buy an interest in DaVita’s dialysis clinics. By jiggering the terms of the deals, the doctors spent lower-than-market rates for their share of the joint ventures and made extraordinarily high returns on their investment.
Third, DaVita guaranteed a future stream of referrals from the doctors by making secondary agreements to pay the physicians to act as medical directors of the clinics and to prevent the physicians or any of their partners from referring patients elsewhere. Without the non-compete agreements, DaVita refused to enter into the lucrative arrangements.
As part of the settlement, DaVita also consented to pay a $39 million forfeiture based on violations concerning two Colorado joint venture transactions in particular.

False Claims Act Lawsuit Targets Kickback Violations By Medical Providers

While Waters & Kraus is not handling this particular False Claims Act case, we are representing whistleblowers in similar lawsuits. If you have comparable claims against a different medical provider, email us or call our qui tam attorneys at 855.784.0268 to learn more about our practice and how we can work together to notify the government about fraudulent abuses of government-funded programs. Paul Lawrence, one of the firm’s qui tam lawyers in the Washington D.C. area office, protects tipsters throughout the whistleblower lawsuit process.

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