DaVita pays $389M in anti-kickback case

A $389 million civil settlement announced last week between DaVita HealthCare Partners and the federal government over allegations of Medicare fraud is the latest example of the feds going after healthcare companies allegedly violating the anti-kickback statute.

The DaVita case began when David Barbetta, a former senior financial analyst in the company’s mergers and acquisitions department, filed a False Claims Act lawsuit against the company. The government later joined the case. DaVita ultimately agreed to pay $389 million to resolve allegations that it paid kickbacks to doctors for patient referrals to its dialysis clinics.

The government alleged DaVita identified physicians and practices that served large populations of patients with kidney disease in a specific geographic area, targeting doctors who were “young and in debt.” It then allegedly offered the doctors joint-venture deals involving the clinics where they referred patients. The government said the doctors agreed not to compete with DaVita or send patients to competitors.

In a written statement, DaVita said: “We have worked incredibly hard to get things right and it is our belief there was no intentional wrongdoing.” The company said “patient care was never at issue, nor were billing or payment practices.” Attempts to obtain further comment from a DaVita spokesman on Thursday were unsuccessful.

Between 2007 and 2013, the number of False Claims Act cases in healthcare brought by whistle-blowers more than doubled, said Patrick Burns, co-executive director of Taypayers Against Fraud Education Fund, a Washington-based advocacy group for whistle-blower suits. Burns said a 2005 law requiring healthcare companies to educate their employees about the False Claims Act might be partly responsible for the surge. That education can lead more employees to become whistle-blowers, he said.

Gordon Schnell, a lawyer with Constantine Cannon in New York who represents whistle-blowers, said anti-kickback cases might be growing more common because they are relatively straightforward for prosecutors compared with other types of false claims issues.

Kickbacks, he explained, are automatic violations of the False Claims Act. “So if you can prove there have been kickbacks, you don’t have as difficult a time showing a violation under the act as you might have with other types of fraud in healthcare,” Schnell said.

Barbetta’s attorney, Eric Havian of Phillips & Cohen in San Francisco, attributed the increase in cases to greater awareness among potential whistle-blowers.