DaVita will spend tens of millions of dollars to settle new allegations that it paid kickbacks to doctors for referring patients — the third time the Denver-based dialysis provider has settled with the federal government after a kickback allegation in the past decade.
The U.S. Department of Justice announced Thursday that DaVita had agreed to pay about $34.5 million to resolve allegations that it paid kidney specialists and surgeons to refer patients to its dialysis centers.
The Justice Department also alleged that the company paid a competitor to refer patients to DaVita Rx, a former subsidiary that provided medications and supplies for dialysis patients.
“Medicare patients should be able to trust that their health care providers will not pay illegal kickbacks to obtain referrals,” Matthew Kirsch, the acting U.S. attorney for the District of Colorado, said in a statement. “This resolution reflects the seriousness of the administration’s determination to restore integrity to the healthcare marketplace.”
Because DaVita settled without going to trial, the allegations remain legally unproven. The company did not immediately respond to questions about the settlement.
DaVita’s stock fell from $140 per share just before Thursday’s announcement to a low of $135.08 before recovering to $137.14 on Friday morning.
The federal anti-kickback law prohibits anyone from offering money or anything else of value to doctors or other health care providers to induce them to refer patients covered by Medicare or Medicaid. Patients with end-stage renal disease who require dialysis are generally eligible 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 a share of the settlement money. He will receive approximately $6.4 million.
The department alleged that the kickbacks to the competitor took the form of buying a number of dialysis clinics the competitor owned in Europe and renewing contracts to purchase supplies at inflated prices. The competitor was not mentioned in the announcement.
The company also allegedly provided management services to vascular access surgeons without charging them. Vascular surgeons modify blood vessels, among other things, to make dialysis possible.
The alleged kickbacks to an unnamed major nephrology practice included giving the practice the right to be the first to refuse to staff a new DaVita dialysis center opening near the practice and to pay $50,000 if the practice did so chose not to staff the center.
DaVita has repeatedly settled federal claims and paid out more than $1 billion over the past decade:
The federal government was forced to pay DaVita $538 million in 2017 after the U.S. Department of Veterans Affairs underpaid for dialysis care.
The company also faced a $383.5 million judgment in 2018 for allegedly contributing to the deaths of three patients by failing to closely monitor them while they were receiving a drug that increased the risk of cardiac arrest. Witnesses told the jury that the company did not warn doctors about the drug’s complications because its use saved money.
In 2022, a jury acquitted DaVita and its former CEO Kent Thiry of criminal conspiracy. The government had argued that its agreements with other dialysis providers not to poach each other’s workers violated antitrust law because they limited workers’ ability to change jobs.
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