DaVita reaches settlement with government on whistleblower charges about alleged kickbacks
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Key takeaways:
- The Department of Justice said the charges included kickbacks to induce referrals to DaVita Rx, a former subsidiary that provided pharmacy services.
- DaVita will pay more than $34 million in the settlement.
DaVita Inc. has agreed to pay more than $34 million to settle allegations brought by a former employee that it paid kickbacks to competitors and physicians in exchange for directing business to its patient care and pharmacy businesses.
Dennis Kogod, the former DaVita Kidney Care chief operating officer who made the allegations to the Department of Justice under the whistleblower provisions of the False Claims Act, will receive $6.37 million of the proceeds from the settlement, the DOJ said in a press release.
Kogod left DaVita in November 2016; according to a regulatory filing, DaVita paid the executive, who was head of its HealthCare Partners group, $1.5 million to terminate his employee agreement and signed a 3-year consulting agreement with Kogod that paid him $100,000 a month. DaVita also agreed to give Kogod a lump sum payment of $1.8 million in January 2017 and pay $100,000 at the conclusion of the agreement in 2019.
In a statement to Healio, DaVita said, “We have worked closely with the government for the past 7 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.
“While we deny any liability, we agreed to this resolution to close this chapter and move forward.”
In 2017, DaVita Rx agreed to pay $67.7 million in a settlement with the DOJ, the Office of Inspector General of HHS and the U.S. Attorney General of Texas about allegations that it billed federal health care programs for kidney drugs that were never used and for offering financial inducements to patients to accept manufacturer copay cards and claim they were unable to help pay for the drugs themselves.
The allegations were brought by former DaVita Rx employees Patsy Gallian and Monique Jones, who received approximately $2.1 million from the settlement.
In the new investigation, the DOJ alleged that DaVita Rx served as a prescription fulfillment provider for its competitors. “In exchange, DaVita paid to acquire certain European dialysis clinics and agreed to extend a prior commitment to purchase dialysis products from the competitor,” the DOJ wrote in the release. “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 DOJ also alleged that DaVita reached agreements to managed 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 centers,” the DOJ wrote.
The DOJ also alleged that DaVita paid fees to a large nephrology practice to induce referrals to dialysis clinics. “DaVita gave the practice a right of refusal to staff the medical director position at any new dialysis center 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,” the DOJ wrote.
“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,” Linda Hanley, special agent in charge of the DHHS Office of Inspector General, said in the release. “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.”
“Medicare patients should be able to trust their health care providers not to pay illegal kickbacks to induce referrals,” Matthew Kirsch, acting U.S. attorney for the District of Colorado, said in the release. “This resolution reflects the seriousness of the government’s determination to restore integrity to the health care marketplace.”
Reference:
Securities and Exchange Commission, Form 8-K. DaVita Inc. https://www.sec.gov/Archives/edgar/data/927066/000119312516742168/d235128d8k.htm. Published October 17, 2016. Accessed July 23, 2024.
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