DaVita Settles Kickback Allegations for $34 Million

August 6, 2024

Author: David W.S. Lieberman, Kelly Shivery,

Davita, Inc., one of the nation’s largest providers of dialysis treatment, will pay $34 million to settle allegations that it paid kickbacks to physicians in exchange for referrals.

The Anti-Kickback Statute and the False Claims Act

The Anti-Kickback Statute (AKS) is the popular name for The Medicare and Medicaid Fraud and Abuse Statute, 42 U.S.C. § 1320a-7b(b). The AKS is a federal criminal law that prohibits offering or accepting kickbacks intended to generate health care business.  Violation of the AKS is a felony. Violation of the AKS triggers liability under the Civil Monetary Penalties Law (CMPL). It also makes the resulting bills to the government false under the False Claims Act, which can subject a violator to three times damages plus penalties of between $5,000 and $10,000, indexed to inflation. By August 2024, False Claims Act penalties ranged as high as $27,894 per violation.

The Kickback Allegations Against DaVita

The government alleged DaVita paid to gain referrals for several of its lines of business.  Specifically, DaVita’s improper conduct induced business to DaVita Rx, its former pharmaceutical subsidiary,  and its dialysis centers.

1. Pharmacy Referrals: One of the key allegations was that DaVita paid kickbacks to a competitor to refer Medicare patients’ prescriptions to DaVita Rx.  In return, DaVita agreed to acquire European dialysis clinics and to purchase dialysis products from the competitor. The government argued that DaVita would not have agreed to these terms without the competitor’s referral commitment.
2. Vascular Access Centers: Another allegation involved DaVita providing management services to vascular access centers owned by physicians who could refer patients to DaVita’s dialysis clinics. DaVita allegedly paid improper remuneration to these physician-owners in the form of uncollected management fees to secure patient referrals.
3. Nephrology Practice Payments: Additionally, DaVita was accused of paying a large nephrology practice to induce referrals to its dialysis clinics. The payment included a right of refusal to staff medical director positions at new dialysis centers near the nephrology practice.  In addition, DaVita made a $50,000 payment despite the practice’s decision not to staff these positions.

The Wrongdoing Was Brought to Light by a Whistleblower

These actions were brought to light by a whistleblower through the False Claims Act’s qui tam provision.  This provision allows private individuals to file lawsuits on behalf of the government. The former Chief Operating Officer of DaVita Kidney Care, filed the lawsuit in  2017. As his reward, the whistleblower will receive $6.3 million of the settlement proceeds.

Medicare patients should be able to trust their healthcare providers not to pay illegal kickbacks to induce referrals. This resolution reflects the seriousness of the government’s determination to restore integrity to the healthcare marketplace.

-Acting U.S. Attorney Matthew Kirsch for the District of Colorado in announcing the settlement.

We Help Whistleblowers Report Illegal Kickbacks

The Whistleblower Law Collaborative LLC, based in Boston, devotes its practice entirely to representing clients nationwide  in bringing actions under the federal and state False Claims Acts and other whistleblower programs. Among the firm’s many successes is the government’s $5.7 million settlement with Massachusetts Eye and Ear. If you are aware of healthcare fraud or any other type of government fraud, contact us for a free, confidential, consultation.