DaVita will spend tens of millions of dollars to settle new allegations it paid kickbacks to physicians for patient referrals — the third time the Denver-based dialysis provider has settled with the federal government following a kickback accusation in the last decade.
The U.S. Department of Justice announced Thursday that DaVita had agreed to pay about $34.5 million to resolve the allegations that it paid kidney specialists and surgeons to refer patients to its dialysis centers.
The Justice Department also alleged the company paid a competitor to refer patients to DaVita Rx, a former subsidiary that provided medications and supplies for patients on dialysis.
Since DaVita settled without going to trial, the allegations remain legally unproven. A DaVita spokesperson said the company denies wrongdoing, but settling the allegations allows it to move forward.
“We have worked closely with the government for the past seven years to investigate these allegations, which involve transactions that date back more than a decade and largely involve business units we no longer operate and people who haven’t been with the company for years,” DaVita said in a statement. “We remain committed to compliance and operating with the highest integrity as we focus on the future of kidney care and doing what we do best: serving our patients.”
The Department of Justice said the government had committed to “restore integrity” in health care.
“Medicare patients should be able to trust their health care providers not to pay illegal kickbacks to induce referrals,” Matthew Kirsch, the acting U.S. attorney for the District of Colorado, said in a statement.
DaVita’s stock dropped from $140 per share immediately before the department’s announcement Thursday to a low of $135.08, before rebounding to $137.14 on Friday morning.
The federal anti-kickback law forbids anyone from offering money or anything else of value to doctors or other providers to get them to refer patients covered by Medicare or Medicaid. Patients with end-stage kidney disease, who need dialysis, generally qualify for Medicare.
A former chief operating officer at DaVita, Dennis Kogod, brought the alleged kickbacks to the government’s attention in 2017 by filing a whistleblower lawsuit, which entitled him to some of the settlement money. He will receive about $6.4 million.
The department alleged that the kickbacks to the competitor took the form of buying some dialysis clinics the competitor owned in Europe and extending contracts to buy supplies at elevated prices. The announcement didn’t name the competitor.
The company also allegedly provided management services to vascular access surgeons without charging them. Among other things, vascular access surgeons alter blood vessels to make dialysis possible.
The alleged kickbacks to an unnamed large nephrology practice involved giving the practice the right of first refusal to staff a new DaVita dialysis center opening near the practice, and paying $50,000 when the practice opted not to staff the center.
DaVita has repeatedly settled federal claims over the last decade, paying more than $1 billion:
- In 2018, the company paid $270 million because of allegations that a medical practice it purchased had exaggerated patients’ illnesses to collect more money from Medicare.
- In 2017, DaVita paid $63.7 million to settle allegations it paid kickbacks to patients to get them to use its pharmacy services, including offering discounts and wiping out unpaid bills. The company also allegedly billed Medicare and Medicaid for medications it never delivered.
- In 2015, the company paid $495 million after it allegedly threw out partially used vials of drugs that could have been used again, but billed Medicare for the entire vial.
- In 2014, DaVita paid $389 million to settle allegations it paid kickbacks to nephrology practices, specifically choosing those whose physicians were “young and in debt.” It later paid $22 million to Colorado and four other states’ Medicaid programs to settle the same allegations.
- In 2012, the company paid $55 million for allegedly overusing an anemia drug on kidney patients, and sometimes billing the government for unused doses.
The federal government had to pay DaVita $538 million in 2017, because the U.S. Department of Veterans Affairs had underpaid for dialysis care.
The company also faced a $383.5 million judgment in 2018 for allegedly contributing to three patients’ deaths by not monitoring them closely while they received a drug that increased their risk of cardiac arrest. Witnesses told the jury the company hadn’t warned doctors about the drug’s complications because using it saved money.
In 2022, a jury acquitted DaVita and its former CEO Kent Thiry of criminal conspiracy. The government had alleged that its agreements with other dialysis providers not to poach each other’s employees violated antitrust law by limiting workers’ ability to move between jobs.
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