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From Health Law Daily, October 27, 2014

DaVita to pay $389M in largest kickback-only case in healthcare history

By Harold M. Bishop, JD

DaVita Healthcare Partners, Inc. (DaVita), headquartered in Denver, Colorado, and one of the leading providers of dialysis services in the United States, has entered into a Corporate Integrity Agreement (CIA) with the Office of Inspector General of HHS which requires it to unwind some of its business arrangements and restructure others, and includes the appointment of an independent monitor to prospectively review DaVita’s arrangements with nephrologists and other health care providers for compliance with the federal Anti-kickback statute. The CIA will also promote DaVita’s compliance with the statutes, regulations, and written directives of Medicare, Medicaid, and all other federal health care programs (Corporate Integrity Agreement, October 22, 2014).

Contemporaneously with the CIA, the Department of Justice announced that DaVita has entered into a settlement agreement requiring it to pay $350 million to resolve claims that it violated the False Claims Act (FCA) by paying kickbacks to induce the referral of patients to its dialysis clinics. As part of the settlement, DaVita also agreed to a civil forfeiture in the amount of $39 million based upon conduct related to two specific joint venture transactions entered into in Denver, Colorado. The claims settled by the agreement are allegations only; there has been no determination of liability.

The complaint alleged that, between March 1, 2005, and February 1, 2014, DaVita identified physicians or physician groups that had significant patient populations suffering renal disease and offered them lucrative opportunities to partner with DaVita by acquiring or selling an interest in dialysis clinics to which their patients would be referred for dialysis treatment. DaVita was further alleged to have ensured referrals of these patients to the clinics through a series of secondary agreements with the physicians, including agreements in which the physician agreed not to compete with the DaVita clinic and non-disparagement agreements that would have prevented the physicians from referring their patients to other dialysis providers.

The settlement resolves allegations originally brought in a lawsuit filed under the whistleblower provisions of the FCA. The suit was filed by David Barbetta, who was previously employed by DaVita as a Senior Financial Analyst in DaVita’s Mergers and Acquisitions Department. Barbetta’s share of the recovery has yet to be determined.

The lawsuit is captioned United States ex rel. David Barbetta v. DaVita, Inc. et al., No. 09-cv-02175-WJM-KMT (D. Colo.).

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