One of the nation’s leading dialysis services companies will pay $350 million to resolve claims that it paid illegal kickbacks to physicians and physician groups in an effort to boost patient referrals. The Justice Department announced today that it had reached the settlement agreement with DaVita Healthcare Partners, Inc., which has dialysis clinics in 46 states and Washington D.C.
The settlement resolves claims initially filed by whistleblower David Barbetta, who worked for DaVita as a Senior Financial Analyst in the company’s Mergers and Acquisitions Department. Mr. Barbetta will receive a share of the settlement amount, though the exact portion has not yet been determined.
The government claims that between March 2005 and February 2014, DaVita identified physicians and physician groups with large renal disease patient populations and offered them partnership interests in DaVita’s dialysis clinics in return for referring patients. DaVita used a three-prong approach in perpetrating this alleged fraud:
- DaVita would identify physicians or a physician group they considered a “winning practice” in a specific area. A “winning practice” could mean that the physicians were young and in debt, leading DaVita to assume that most, if not all of the physicians’ patients would be referred to DaVita clinics.
- Once DaVita targeted a practice, they would offer them a lucrative opportunity to enter into a joint venture in which DaVita would either acquire an interest in a dialysis center owned by the practice, or DaVita would sell interest in one of its dialysis centers to the practice. In some cases, the Justice Department maintains that DaVita was able to manipulate the value of clinics it was selling interest in, which allowed the practice DaVita partnered with to realize exceedingly high returns, all but ensuring that the practices would refer patients to DaVita.
- DaVita paid doctors they partnered with to serve as medical directors on the joint venture clinics. DaVita also used non-compete agreements with all of the practices it partnered with, ensuring that the practices could not send business to competing dialysis clinics.
As part of the settlement, DaVita agreed to a $39 million civil forfeiture based on two specific joint ventures in Denver, Colorado. The company has also entered into a Corporate Integrity Agreement with the Office of the Inspector General, which requires some business arrangements to be changed or restructured.