DaVita Inc., headquartered in Denver, Colorado, has agreed to pay $34,487,390 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 centres.
The Anti-Kickback Statute prohibits anyone from offering or paying, directly or indirectly, any remuneration — which includes money or any other thing of value — to induce referrals of patients or of items or services covered by Medicare, Medicaid and other federally funded programs.
The United States alleges that DaVita paid kickbacks to a competitor to induce referrals to DaVita Rx to serve as a “central fill pharmacy,” or prescription fulfilment provider, for that competitor’s Medicare patients’ prescriptions.
In exchange, DaVita paid to acquire certain European dialysis clinics and agreed to extend a prior commitment to purchase dialysis products from the competitor. DaVita would not have paid the price that it did for these deals without the competitor’s commitment to refer its Medicare patients’ prescriptions to DaVita Rx in return.
The United States further alleges that DaVita provided management services to vascular access centers owned by physicians in a position to refer patients to DaVita’s dialysis clinics. DaVita paid improper remuneration to these physician-owners in the form of uncollected management fees to induce referrals to DaVita’s dialysis centres.
Finally, the United States alleges that DaVita paid improper remuneration to a large nephrology practice to induce referrals to DaVita’s dialysis clinics. DaVita gave the practice a right of refusal to staff the medical director position at any new dialysis centre that opened near the nephrology practice and paid the practice $50,000 despite the practice’s decision not to staff the medical director position for those clinics.
“Improper financial arrangements between Medicare providers can distort the healthcare marketplace,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “We will hold accountable healthcare providers that seek to generate business by paying unlawful remuneration.”
“Medicare patients should be able to trust their healthcare providers not to pay illegal kickbacks to induce referrals,” said Acting U.S. Attorney Matthew Kirsch for the District of Colorado. “This resolution reflects the seriousness of the government’s determination to restore integrity to the healthcare marketplace.”
“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).
The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by Dennis Kogod, a former Chief Operating Officer of DaVita Kidney Care.
Under those provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery. The qui tam case is captioned United States ex rel. Kogod v. DaVita, Inc., et al., No. 17-cv-02611-PAB (D. Colo.). Kogod will receive $6,370,000 of the proceeds from the settlement.
