DaVita has agreed to pay more than $34 million to resolve allegations that it violated the False Claims Act by paying kickbacks to induce referrals to DaVita Rx, a former subsidiary that provided pharmacy services for dialysis patients, and by paying kickbacks to nephrologists and vascular access physicians to induce the referral of patients to DaVita’s dialysis centers. Of the $34,487,390 settlement amount, $17,243,695 is restitution.
The United States alleged that DaVita paid kickbacks to a competing outpatient dialysis and renal pharmacy company to induce referrals to DaVita Rx to serve as a “central fill pharmacy” for the competitor’s Medicare patients’ prescriptions. DaVita Rx was responsible for processing, fulfilling, dispensing, and shipping prescription drugs to Competitor’s Medicare dialysis patients, either at the patients’ home or Competitor’s dialysis clinics. In exchange, DaVita paid to acquire nine European dialysis clinics in Poland and Portugal and also agreed to extend a prior commitment to purchase dialysis products from the competitor. DaVita would not have paid the price it did not these deals without the competitor’s commitment to refer Medicare patients’ prescriptions to DaVita Rx.
Second, DaVita allegedly provided management services to vascular access centers and ambulatory surgical centers owned by physicians who were in a position to refer patients to DaVita’s dialysis clinics. DaVita paid the physician-owners improper remuneration by not collecting management fees, in an attempt to induce referrals from the physicians to DaVita’s dialysis centers.
Finally, the United States alleged that DaVita gave a large nephrology practice improper remuneration by offering the right of refusal to staff the medical director position at any new dialysis center that opened near the nephrology practice. DaVita also allegedly paid the practice $50,000, despite the practice opting not to staff the medical director position for those clinics.
The case was initially brought by the former Chief Operating Officer of DaVita Kidney Care under the qui tam provisions of the False Claims Act. For his role in the case, he will receive $6,370,000.
As we often see, the settlement is not an admission of liability by DaVita nor a concession by the United States that its allegations are not well-founded. DaVita denies the allegations.
“Illegal kickback payments corrupt the market for health care services and cause harm and financial loss to Medicare and other federally funded health care programs,” said Special Agent in Charge Linda Hanley of the Department of Health and Human Services Office of Inspector General (HHS-OIG). “Our ongoing enforcement efforts aim to safeguard the integrity of taxpayer-funded health care programs, like Medicare and Medicaid, while curbing schemes that unduly influence patients’ and doctors’ health care options.”