/>iDaVita Inc. Agrees to $34 Million Settlement to Resolve Allegations of Violating the False Claims Act
23 July 2024. DaVita Inc., a major dialysis provider based in Denver, Colorado, has agreed to pay $34,487,390 to resolve allegations under the False Claims Act (FCA). The settlement addresses allegations of illegal kickbacks aimed at inducing referrals to their former subsidiary, DaVita Rx, and their dialysis centers. This case underscores the importance of adhering to the Anti-Kickback Statute in the healthcare industry. The relator in this qui tam action was the former Chief Operating Officer of DaVita Kidney Care, and they will receive almost 18.5% of the settlement as a reward.
Details of the Settlement
Kickbacks to Competitors
According to the allegations, DaVita paid kickbacks to a competitor to induce referrals to DaVita Rx, which fulfilled prescriptions for the competitor’s Medicare patients’ prescriptions. This arrangement was part of a broader deal where DaVita acquired European dialysis clinics and agreed to purchase dialysis products from the competitor. The payments made for these deals were inflated due to the expected referrals, thereby violating the Anti-Kickback Statute.
Management Services to Vascular Access Centers
DaVita also allegedly provided management services to vascular access centers owned by physicians who could refer patients to DaVita’s dialysis clinics. By not collecting management fees for these services, DaVita offered improper remuneration to these physician-owners to secure patient referrals, also in violation of the AKS.
Payments to Nephrology Practices
Additionally, DaVita allegedly paid a large nephrology practice to induce referrals to their dialysis centers. This included granting the practice a right of refusal for medical director positions at new dialysis centers and paying $50,000 to the centers despite the practice opting not to staff these positions. These actions were aimed at influencing the practice to direct patients to DaVita’s facilities.
Background of the False Claims Act and Anti-Kickback Statute
The False Claims Act is a federal law that imposes liability on individuals and companies who defraud governmental programs. The qui tam provision of the FCA allows whistleblowers to file actions on behalf of the government and share in any financial recovery.
The Anti-Kickback Statute (AKS) is another critical component of federal law, especially as it pertains to healthcare. It prohibits offering or paying any remuneration—whether money or other items of value—to induce referrals of services covered by Medicare, Medicaid, and other federally funded programs. Violations of the AKS can result in severe penalties, including hefty fines and exclusion from federal healthcare programs.
Whistleblower Involvement
The False Claims Act whistleblower in this case was the former Chief Operating Officer of DaVita Kidney Care. Under the qui tam provision of the False Claims Act, private individuals can file actions on behalf of the U.S. government and potentially receive a portion of any financial recovery. In this case, Kogod will receive $6,370,000 of the settlement, highlighting the crucial role whistleblowers play in uncovering fraud. Healthcare industry insiders such as this whistleblower are well positioned to see something “off” about a company’s claims to a taxpayer-funded healthcare program and to say something about it. As the Principal Deputy Assistant Attorney General said about the case, “Improper financial arrangements between Medicare providers can distort the healthcare marketplace.”
Implications for Healthcare Professionals
This settlement serves as a critical reminder for healthcare professionals and organizations about the importance of compliance with the False Claims Act and the Anti-Kickback Statute. Engaging in practices that involve kickbacks, even indirectly, can lead to severe legal consequences, including substantial financial penalties and damage to reputation. Kickbacks corrupt healthcare, putting profits before patients and raising costs for taxpayers, who are both the ultimate victims of and who bear the burden of fraud, waste, and abuse in healthcare. The Special Agent in Charge of the Department of Health and Human Services Office of Inspector General summed up the negative impacts of kickbacks: “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. 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.” Whistleblowers keep those options fair.
